While markets for unsaturated polyester resins were in tatters in 1991, promoting a consolidation of the industry, demand roared back last year. The survivors in the industry - there are six remaining, down from 13 producers 10 years ago - now are letting the dust settle from the consolidations, and high demand has prompted the leading producer to undertake a major production capacity expansion.
Unsaturated polyester resin makers have raised prices about 20 percent since January 1993, based on their increased costs of raw materials and continued high demand. The producers put their most recent price increase into the market in the middle of January.
The Reichhold Chemicals Reactive Polymers Division, the industry leader, announced Jan. 3 that it would increase its production capacity for unsaturated polyester resins by 25 percent during the next two years.
Reichhold said it is increasing production capacity at its Morris, Ill., facility by 25 million pounds this year, and will increase capacity at its Houston plant by 25 million pounds in 1996.
Reichhold said it has separate plans to increase production by another 50 million pounds a year by reactivating its Azusa, Calif., plant. The Azusa plant was idled in 1991, and Reichhold does not have a time period in which that reactivation will take place.
Randall Weghorst, president of Reichhold's Reactive Polymers Division, said the 100 million-pound expansion is necessary to meet demand.
``All of our polyester plants currently are operating at or near 100 percent of capacity,'' Weghorst said in a prepared statement, noting that a high capacity utilization rate limits his company's ability to serve customers. The company will add new reactors at Morris and Houston, Weghorst said.
Industry analysts pegged Reichhold's sales of unsaturated polyesters at about $220 million a year. That estimate gives Reichhold the lead position in the industry over Alpha-Owens Corning Limited Liability Corp. of Collierville, Tenn. Alpha-Owens Corning had estimated sales of $205 million in 1994, from its 400 million-pound-per-year production capacity for unsaturated polyester resins.
Alpha-Owens Corning combines the polyester resins businesses of Toledo-based Owens-Corning with Collierville-based Alpha Resins Corp. That merger was completed in October.
After Alpha-Owens, the consolidation of the Polyester Unit of Aristech Chemical Co. of Pittsburgh with the Composite Polymers Division of Ashland Chemical Co. of Columbus, Ohio, is expected to result in the third-largest producer of unsaturated polyesters.
Ashland's acquisition is expected to be completed by the end of the first quarter of 1995, and to result in a company with sales of about $180 million. The merger is expected to give Ashland the largest nameplate capacity in the industry.
Larry Baker, vice president and general manager of Ashland's Composite Polymers Division, said in a recent telephone interview that his company will not make any further moves to expand until it absorbs the Aristech operations.
Ashland's acquisition will put the Minneapolis-based Commercial Resins Division of Interplastic Corp. into third place in the industry, with estimated sales of $145 million.
Cook Composites and Polymers Co. of Kansas City, Mo., and the polyester resins unit of McWhorter Inc. of Carpentersville, Ill., are the other producers, with estimated sales of about $70 million to $80 million.