Stacks of blank compact discs at mass-market retailers might be good news for music fans, but they are viewed a bit differently by PC makers.
``It's a little bit distressing to see the value of the product driven down with the emergence of blank CDs, but overall volume has gone up,'' said Roger Rumer, Americas PC product management director for Bayer Corp. of Pittsburgh.
Even with the first half slightly down because of the SARS virus, global PC demand should finish up 3-4 percent in 2003, said John Dineen, vice president and general manager of Lexan-brand PC for market leader GE Plastics of Pittsfield, Mass. Smaller injection molded parts and business equipment continued to move from North America to Asia in 2003.
``The automotive market has been stable and we've seen good growth in DVDs, offsetting a loss in CD business,'' Dineen said. ``We also plan on creating demand with Flexplay 48-hours DVDs and in large parts for recreational vehicles that use our SLX-brand PC film.''
At Bayer, there's been strong activity in the medical market for dialysis parts and oxygenators. Blow molding sales also have been strong, Rumer said. The firm has also targeted specialty markets with its Fantasia color program.
Dineen added that his firm has seen evidence that the pace of work moving from North America to Asia is slowing down. He said that global PC growth in 2004 could hit 3-5 percent as a result of new applications and technology.
``We're seeing the most growth around new product technology and blended products like Geloy [acrylic styrene acrylonitrile] and Lexan SLX,'' Dineen said. ``There's also growth in the outdoor market, in vehicles and other areas where you need paint replacement.''
Global PC operating rates dipped to about 70 percent in 2003. Those rates need to be in the high 80s to have a healthy market, Dineen said. GE's only capacity event is the completion of its second plant in Cartagena, Spain. If brought on in 2004, the project would create almost 80 million pounds of new capacity.
Average per-pound selling prices for North American PC were up about 5 percent through August, but pricing spikes for raw materials such as benzene limited margin growth.
In spite of a soft year for auto builds, the nylon resin market held its own in the first half of 2003 with sales up more than 3 percent. Nylon resin makers expect that number to improve in 2004 as the auto market recovers.
``Auto builds are predicted to go up from 16.4 [million] to 16.6 million in 2004, which should create penetration for our [nylon 6/6] resins in rocker covers and under-hood beauty covers and for high-temperature nylon in transmission covers,'' said Dave Flitman, North American nylon business director for market leader DuPont Co. of Wilmington, Del.
``We're also looking at a lot of new areas,'' he added. ``We're not just sitting back on our core business. Fibers have been strong and film's been steady.''
Lance Altizer, nylon business manager for BASF Corp. of Mount Olive, N.J., expects North American sales to finish flat to slightly up in 2003.
``The market hasn't lived up to expectations,'' Altizer said. ``In our case, automotive has still been strong, but in other areas, such as power tools, more business is moving to China. It's amazing how quickly it's accelerated, especially at accounts that are dealing with big-box retailers.''
BASF has a number of auto manifold programs coming on in the second half of 2003, but Altizer pointed out that a lot of automotive projects now are more demanding, and that nylon is seeing more competition from PP in engine covers, fans and shrouds.
BASF also is seeing more small-engine conversion from metal to nylon in housings for lawnmowers and leaf blowers, where producers are looking for weight reduction and part integration.
Overcapacity remains an issue in North America, especially with a good deal of compounding capacity added in recent years. As a result, DuPont's Flitman said operating rates in the region were between 80-90 percent in 2003, but should be above 90 percent in 2004.
Average per-pound selling prices for North American nylon resin were up about 10 percent through August, as producers worked to pass on raw material hikes.
It's a challenge to paint the North American ABS market in a good light, as it has lost sales and struggled with overcapacity. 2003 looks to be more of the same, with producers expecting to close the year with demand down about 5-8 percent, in spite of a solid second half to date.
``There's been business moving overseas and a mix of things going on,'' said Herman Savenije, styrenic copolymers business director for BASF. ``Fifty million pounds of [North American ABS] demand has gone overseas in the last 12-18 months.
``Margins have been compressed this year and have never really come back to acceptable levels,'' Savenije added.
``Global operating rates are in the low- to mid-70s, and they really need to be in the low- to mid-80s. There's been a lot of capacity added in Asia and an overflow in Europe.''
In North America, ABS was hit particularly by cutbacks in automotive and construction, according to Kevin Dunay, Bayer styrenics product line manager.
2004 also could represent a challenge, but Savenije is hopeful of growth in the electric market because of the operating efficiency of global suppliers.
Savenije also described ABS/nylon alloy as ``an up-and-coming product'' that's competing globally in auto interiors, instrument panels and consoles.
The material is being used in exterior mirror housing holders on the 2003 Honda Accord.
At Bayer, Dunay said opportunities exist for the firm's Lustran ABS weatherable polymers in external panels for recreational vehicles and for Bayblend PC/ABS in instrument panels. Market opportunities in thermoforming include parts for boats, buses, ground effects and spas, he said.
The highly diverse world of thermoplastic elastomers almost exists in a pocket universe when compared with commodity or engineering materials. As a result, its performance for 2003 and prospects for 2004 are all over the board.
``We saw double-digit growth in K-Resin [styrenic block copolymers] this year,'' said David Morgan, K-Resin business director for Chevron Phillips Chemical Co. LP of Houston. ``That's more impressive because the economy's down.''
``We can usually do GDP plus 1 or 2 percent,'' he added. ``But we've added 13 new grades in the last 16 months for all of our markets - film, injection molding, blends with polystyrene - and that's really helped. We'll continue to introduce new grades in '04 but not at the same rate,'' Morgan said.
Faisal Syed, a TPE analyst with Chemical Market Resources Inc. in Houston, is a little skeptical of Morgan's claims.
``Pricing has dropped for SBCs [like K-Resin] because of overcapacity and sluggish demand,'' Syed said.
``New firms like Asahi, Septon, Kuraray and Dynasol are entering the market as people are looking for cheaper alternatives or for materials to blend with other resins,'' he said.
``Growth this year has been closer to 5 percent. Double-digit is too optimistic.''
The market for thermoplastic polyurethanes should be flat to slightly up in 2003, according to Stephane Morin, TPU market manager for BASF.
Morin said the market has been hurt somewhat by automotive business switching from TPUs to other TPEs because of price pressure.
Some injection molding TPU business also has moved to Asia, he said.
Syed added that North American TPUs have major overcapacity and that prices have been dropping. The material still is relatively high-priced vs. other resins, due in part to its excellent abrasion resistance, he said.
BASF's alliance with GLS Corp. to develop new TPU-based compounds has led to new business in hydraulic tubing, according to Morin. BASF also is adding five to six new TPU grades in 2004, with more of an extrusion focus, he said.
The firm also is streamlining its TPU plant in Wyandotte, Mich., to increase capacity 15 percent by the end of the year.
Other TPEs - such as thermoplastic vulcanizates, thermoplastic olefins and copolyesters - have held up better this year, Syed said.
TPVs and TPOs are enjoying high-single-digit growth, driven by major applications in automotive. Copolyesters also ``are holding up pretty well'' as a result of specialty work in under-the-hood applications, according to Syed.