Helen Harker, Associate Director at IAL Consultants told delegates at the CPI conference in New Orleans that US polyurethane production had reached pre-crash levels for the first time. Is the only way up? It depends on product segment…
Across Nafta, demand for polyurethane grew by 4.4% between 2014 and 2016, Helen Harker, Associate Director at IAL Consultants told delegates at the CPI meeting, but that number hides wide variations.
Growth in the US was closer to a CAGR of 4.6% during the period of 2014-2016, while, Canada managed 2.7% with Mexico closer to the US, Harker explained.
‘Polyurethane production increased by 4.4% over 2014 to around 3.8 MT/year (lbs 8.3 bn), the first time that production has surpassed the pre-crash levels of 7.6 bn lbs in 2006. Clearly there are still many growth opportunities available for the PU industry in the future,’ she said.
Across the trading bloc, major application demand continues to be rigid and flexible foam which account for 64% of the market, she said, adding: ‘The main drivers continue to be construction and housing. The number of new housing starts increased by 5.6% in 2016 and completions rose by 9.5%.’
Major end-uses for polyurethane include: rigid foam for building insulation and flexible foam in the furniture and bedding segments, plus elastomers, coatings and adhesives. The fastest growth was in MDI binders for wood. The growth in MDI binders was thanks ‘to the buoyant construction market and [because] MDI continued to replace formaldehyde-based resins’ in those applications.
The construction sector accounts for ‘37% of the PU market for the materials and PU demand grew by 6.8% between 2014 and 2016,’ she said.
Harker continued that transport, furniture and bedding are the other main groups, she added. ‘Transport accounts for around 19% of the market, with furniture and bedding at around 16%,’ she said.
In the construction sector, growth in rigid foam is driven by building codes which demand improved efficiency and reduced air leakage which helped PIR and spray foam products, she said.
Across Nafta, in the automotive sector, demand for foam, coatings and other PU products used in vehicles grew by 2% between 2014 and 2016. Here, the trend towards lower weight vehicles, with better acoustics, are playing to the material’s strengths.
Looking at the Canadian market, Harker said it accounts for 8.2% of North American PU production at around 370 kT (lbs 700 m)/year. Not only is it small, she said, but it is growing slowly at 2.7%/year during the study period.
Demand for polyurethane products is dominated by the construction sector, which took 52% of the country’s PU production 2016. PIR board and spray foam experienced the highest growth during the study period, she said, adding, there was increased demand for MDI binders.
The Canadian automotive sector was relatively buoyant in 2016. ‘However, like the US, there was a continuing decline in passenger car production. It fell by 9.7% in 2016 over 2015, she said. Again, like the US to some extent this was made up for by commercial vehicle and truck production, which rose about 12% over the same period,’ Harker continued.
Ford and Fiat Chrysler have pledged heavy investment into the Canadian car industry, just as they have in the US, which could be around $1bn each, she said.
In Mexico, we have total PU production increased by 408 kT (lbs 900m) with a CAGR of 4.2% between 2014 and 2016 during the study period. Most of this growth took place in rigid foam for the appliance and construction sectors, Harker added.
Appliances accounted for around 30% of PU demand. Mexico is the world’s largest exporter of fridge freezers and there was strong growth of around 5% in 2016 , in this sector.
Despite this bright spot, growth slowed in 2016 compared with 2015, she said. During the study period, the Mexican economy became weaker; inflation increased and the American administration’s attitude to trade with Mexico has increased uncertainty in the country.
About the report
The End Use Market Survey of the Polyurethanes Industry in the U.S., Canada and Mexico in 2016 was carried out by IAL Consultants on behalf of the ACC Center for the Polyurethanes Industry and is available at www.americanchemistry.com/polyurethanes. It is a comprehensive study based on about 250 interviews with a range of different groups in the value chain including the raw materials producers, polyols and isocyanate producers; systems houses; and end users, who provided a real grass-roots experience of consumer trends. Full copies of the report are sold with customisable data tables.