By: Frank Esposito
November 18, 2013
CHICAGO ‒ Global nylon resin markets are doing OK, but challenges remain for polystyrene, polycarbonate and ABS.
An improved automotive market has helped drive demand for both nylon 6 and 6/6 resins, IHS Inc. nylon market analyst Paul Blanchard said at the Global Plastics Summit, held Nov. 4-6 in Chicago. Automotive remains the largest end market for both types of nylon. Film is the second-largest market for nylon 6, while electrical/electronic ranks second for nylon 6/6.
High prices for benzene feedstock – spurred in part by the industry's switch to lighter natural gas-based feedstocks – are expected to put pressure on nylon and other resins in the years ahead, according to Blanchard. Benzene prices "aren't expected to come down dramatically," he said.
The global nylon 6 resin market remains splintered, with BASF SE leading the field with a market share of only eight percent. More than two billion pounds of capacity are set to be added in China in 2014 and 2015, which is more than the market needs, according to Blanchard. Lanxess AG also will add nylon 6 capacity in Antwerp, Belgium in 2016.
Globally, nylon 6 demand is expected to increase from 2.3 percent per year from 2008-12 to 3.5 percent from 2013-18. Pricing, however, has been on a downward trend since 2011 and is expected to be flat to slightly down in 2014, Blanchard said.
The global nylon 6/6 market is less splintered, with Ascend leading the way with a 22 percent market share. Invista also has a 16 percent stake in the field. Capacity additions for nylon 6/6 are less than in nylon 6, with only about 440 million pounds expected to be added in 2015-16.
Nylon 6/6 pricing is on pace to be flat to slightly down in 2014, Blanchard said. Demand for that material is expected to reise from 2.6 per year from 2008-13 to 3.6 percent from 2013-18.
There's also been some recent competition between nylon 6 and 6/6 in some applications, such as auto air intake manifolds, he added. Polypropylene also is competing with both nylons. PP makers "see some real opportunities where nylon is overspecified," Blanchard said.
The well-documented struggles of the PS market are expected to continue, according to IHS PS market analyst Priya Ravindranath. High benzene prices have made PS less competitive vs. other resins, while environmental challenges have led the material to be banned in some areas.
"There's been a significant [PS] price increase in the last decade, along with a steady decline in demand," Ravindranath said. Global PS demand averaged a decline of almost 1 percent per year from 2003-13.
High prices and low benzene supplies in North America will lead to benzene imports there increasing by 30 percent by 2018, making prices much more sensitive to supply disruption, she added. Global benzene prices are expected to remain in the $4-$5 per gallon range in the near future, price levels that are high by historical standards.
And even though PS costs have climbed by more than 60 percent since 2009, Ravindranath said there's only been a slight increase in the profit margins of PS makers.
Looking ahead, she said global PS demand should improve to two percent per year from 2013-18, although that level is below global GDP growth expectations. PS demand in packaging also is expected to grow almost one percent per year in that period.
Global PS operating rates are set to be between 65-70 percent, with North American PS operating rates higher at 75-80 percent – in spite of the region having more than 1.3 billion pounds of excess capacity.
"The reinvestment economics aren't there" for North American PS, Ravindranath said, adding that the PS market doesn't benefit from increased supplies of shale gas.
Global markets for PC and ABS are awash in excess capacity, with most of that material located in Asia, IHS PC/ABS market analyst David Gee said.
Asia – which accounts for almost 60 percent of global PC demand – is adding almost 2 billion pounds of new capacity through 2017. That's more than what's needed to handle global PC demand growth, which is pegged at 4.5 percent from 2013-18.
Global PC operating rates in that period are expected to be 70-80 percent, although Gee said that some new projects could be delayed because of the large amount of new capacity coming on. In North America, new global capacity has made it difficult for PC makers to raise prices. Prices there are expected to be roughly flat in 2014, Gee added, with more Asian import material coming in and fewer PC exports going to China.
In the global ABS market – with about 70 percent of demand in Asia – total demand of almost 16 billion pounds is well outpaced by total capacity of almost 22 billion pounds, Gee said. Low single digit demand growth is expected in 2014.
North American ABS profit margins are expected to remain stable in 2014, with prices declining slightly as more foreign material with lower raw material costs becomes available, he added.