HOUSTON - While polypropylene production capacity is expected to grow in the next few years, new applications and continued strong demand should surpass those increases. As a result, industry execu-tives said at recent conferences in Houston that they anticipate the ``storm'' that burst over the PP industry in early 1994 to continue for the next five years, with a slight respite in late 1996 and early 1997.
While new production facilities in Asia should reduce export demand from North America, worldwide demand is projected to increase beyond the level of plant expansions, causing continued tightness in the market and upward pressure on prices.
In the United States and Canada, producers have announced a 3.9 percent increase in production capacities each year for the next five years, according to James J. Merhar, director of business and market strategy for Himont U.S.A. Inc. of Wilmington, Del. Merhar spoke March 22 at the Dewitt Petrochemical Confer-ence in Houston.
``Sales demand and capacity will remain balanced only if demand grows at the same rate,'' Merhar said, adding that a 3.9 percent annual increase in demand - which would match the increase in production facilities -would represent the lowest increase in demand for PP in history.
``U.S. PP domestic sales steadily grew over the last five years at 11.1 percent per year,'' Merhar said.
Merhar noted exports of PP resins from the United States declined by nearly 26 percent between 1991 and 1994, primarily due to the construction of new production plants in Asia. Also, he noted imports to the United States increased by nearly 53 percent in the same period.
Combining imports and exports with domestic sales, Merhar noted total sales and use of PP in the United States grew by 6 percent a year from 1991 through 1994, an historical rate that significantly surpasses the planned 3.9 percent increases in production capacities for the coming years.
Demand for PP is being boosted by several factors, Mark Eggleston, PP product manager for the Polymers Business Group of Amoco Chemical Co. of Alpharetta, Ga., said in a speech at the CMAI 1995 World Petrochemical Conference March 23 in Houston. CMAI is a Houston-based consulting group.
Eggleston also said that PP demand has grown at a rate more than double that of the economy, and has been substituted for numerous materials, including metals and other polymers.
``Polypropylene is an essential material, with few viable substitutes. On a density basis, polypropylene is one of the most economical materials for fabricating parts ... [and it] tends to be one of the most cost-effective solutions,'' Eggleston said.
He also said improved technologies and catalysts used to make PP resins, and easier processing parameters have extended the range of PP applications.
He said PP now can compete successfully with polyurethane, ABS, nylon and a number of other resins for a wide range of applications, including thermoforming applications in which PP increasingly is being designated instead of polystyrene.
Both Eggleston and Merhar agreed in their separate talks that there are sufficient U.S. PP expansions to indicate there will be a good supply - even, perhaps, a small oversupply - of resins in 1996 and 1997. However, they also expect that easing of tightness in the market to be short-lived.
Fina Oil and Chemical Co. of Dallas, Epsilon Products Co. of Marcus Hook, Pa., Phillips Sumika Polypropylene Co. of Houston and Solvay Polymers Inc. of Houston all announced major PP capacity increases in the past nine months that will be put into production in the next 18-24 months.
With separate, incremental production increases planned by other manufacturers, 1.3 billion pounds of new PP production capacity is due to be added by 2000, Merhar said.