By David Reed, UT EditorHouston, Texas- This may not be a 'perfect storm,' but I have never seen such a collection of problems at one time," said Bob Kirk, vice president of the comfort marketing unit of Bayer MaterialScience llc, US arm of the Bayer Group based in Leverkusen, Germany, speaking in a 17 Oct. interview at the API trade fair and conference in Houston.Although we have lifted force majeure supply restrictions on TDI (toluene diisocyanate)," the future supply situation for the key ingredient for flexible foams still looks tough following recent plant closures, Kirk said, indicating that the situation for other polyurethane foam raw materials such as polyether polyols was also looking problematic in the short-to-medium term. Monomeric MDI (methylene diphenyl diisocyanate), used in speciality products such as elastomers and footwear, is also on force majeure, following the shutdown of operations at the Baytown plant in the wake of the hurricanes, the Bayer VP indicated."Bayer's TDI customers will remain on 50% allocation for about another week," he continued, indicating that supplies of the material's main feedstocks are in good shape."But, this is the first time in 45 years there has been such a storm. I have never before heard of foamers declaring force majeure," the Bayer chief said flatly.With a total world market of about 2 billion pounds (910 kilotonnes), the recent moves by Lyondell, Huntsman and Bayer have taken about 10 percent of this capacity out," Kirk estimated. This has tightened the world market, in NAFTA (North American Free Trade Area) especially," he continued, then there were the hurricanes and subsequent force majeure." The Lyondell closure [of its 135-ktpa TDI unit in Lake Charles, Louisiana] has left a 'NAFTA hole'," Kirk said, "so [TDI-making] companies are trying to readjust where they are supplying in the world. My feeling is that, by December, a balance will be struck for where the TDI is coming from, but at the expense of exports [from the US]."One obvious consequence of the supply situation is that prices are going up," the Bayer manager said, adding that the good news is that "foamers are getting to pass the increase on. This is because they have let their customers know about the situation," Kirk suggested, "they have made them realise the supply and demand situation is real."One quirk of the situation is that flexible foamers have contributed to the difficulties through their move into visco-elastic and higher density conventional foams, Kirk implied. Because they have higher densities and a relatively more difficult production situation, they use more TDI than conventional foams, he explained. [Scrap levels with visco-elastic foams as high as 30-percent are not uncommon, industry specialists say.]"But I don't see it [VE foam business] declining," Kirk emphasised, "we see new applications, and are working on making VE foams more responsive to lower temperatures, opening up new possibilities."In addition, Bayer is rolling out a new filled polyol system, U3000, for making high resilience slabstock foams, Kirk added.The situation of the automotive seating business is less assured at present, he indicated, with the automotive supply busines in some turmoil."There have been no plant shutdowns," Kirk emphasised, "but some moulding customers are nervous, especially where they were Lyondell customers, waiting to see how our customers handle the situation."The key reason for (a tightness in polyol) this is ethylene supply, needed for the manufacture of ethylene oxide used to make the EO-tipped polyols used in the moulding sector. "Because ethylene is short, now EO is not in balance and we are restricted at capacity on such products," Kirk explained, "but we hope to resolve this in the next few weeks."But there is still an issue on PO (propylene oxide)," he said. The Shell PO unit next year in China will only meet growth, and the next announced expansion is not until 2008, "so supply and demand next year will be in balance, but no extra, which will make it balanced-to-tight based on normal growth," Kirk warned."Normal growth is about 4 percent a year," he added, pointing out that 2004 saw 15 percent polyols growth."It is going to be a dry time," he said flatly, "looking out, supply and demand balance can't stand a major hiccup," Kirk concluded."
