DALLAS — Huntsman Corp. Chairman and Chief Executive Officer Jon Huntsman Sr. had some good and bad data to share with his audience of about 1,000 during his keynote speech at Polyurethanes Expo '98.
The bad news: The polyurethane industry, like most other markets, has never gone through the global turmoil it is now experiencing. And the crisis is likely to get worse before it gets better, he said.
The good news: ``If your company is well managed, and you produce a quality product at a competitive price, you will not only survive the difficult global economic period ahead, you will also emerge stronger than ever,'' he said.
While many companies at the expo, held Sept. 17-20 in Dallas, said the economic problems in the Asia-Pacific region are a concern, the majority did not necessarily agree the PU industry is in trouble.
Quite the contrary, said representatives from two of the largest companies — Bayer Corp. and Dow Polyurethanes, a business group of Dow Chemical Co. They said the industry will continue to grow in the short and long term.
Dow officials said global demand for polyurethanes, in both traditional market segments and new applications, continues to grow. They estimated the compounded growth rate for polyurethanes at about 4 percent yearly, driven mainly by U.S. and Western European markets, as well as by emerging economies in Latin America and Eastern Europe.
Two Bayer spokesmen said they expect an average growth rate of about 5 percent annually for the next five years.
Bayer's Heinz Thomas, general manager of business unit technical installation, said that in the 30 years he has been in the business, he has seen one crisis after another come and go. But the industry continues to expand.
``There's great potential to grow, especially in Asia,'' he said. History tells us that the average growth rate is 7 percent, but we'll have a growth rate of 5 percent, which is good.''
``We're bullish overall for polyurethanes,'' said Robert H. King Jr., vice president of Bayer's technical insulation business group. ``We believe the growth rate will continue to be strong, between 5 and 6 percent. Housing start-ups are rising, and that helps this industry.''
Still, the industry will not see the double-digit improvement of the past two years in the Far East, he said.
``We have to be realistic,'' Thomas said. ``We need new capacity and all companies have to plan for that. It takes four or five years to realize capacity, so we have to move now.''
Dow officials estimate that global consumption this year will be about 15 billion pounds, with Europe and North America remaining the biggest PU markets. Each probably will consume about 35 percent of worldwide output while Latin America and the Asia-Pacific region will account for about 15 percent each, they said.
``Latin America continues to be an area of increased growth,'' said David Fischer, Dow Polyurethanes' global business manager for polyols. ``The dominant factors in this growth are an increase in the standard of living — and subsequent demand for quality consumer goods — and a tangible trend among small-scale, nonintegrated PU regional suppliers to consolidate to remain competitive globally.''
Dow, the world's largest polyol producer, estimated polyol production growth at about 5 percent worldwide. Polyether polyols constitute about 90 percent of industry use, Dow said, with global consumption coming in at about 6.5 billion pounds. Polyester polyols account for the other 10 percent.
``In the Pacific, the economic crisis has lowered the consumption of polyols to under 20 percent,'' Fischer said. ``Although we expect a lessened demand for the next few years, Dow is staying the course in the region.