A tough year for polystyrene does not look to get any easier - with about 19 percent of styrene monomer capacity affected by the hurricanes, according to market watcher CMAI.
In Carville, La., Total Petrochemicals USA Inc. reported ``slight damage'' to its PS plant, but the unit still lost 20 million pounds of production over a period of about a week, according to styrenics Vice President Phil Carruthers.
Total's styrene monomer plant at the site lost about four days of production.
Carruthers said the loss ``can be made up fairly quickly.'' Total already had reduced its Carville workforce by 10 percent in the past year to be more competitive.
Before the hurricanes, 2005 ``had been a little disappointing,'' he said, although the food-service market had been normalizing in the weeks before Katrina. ``Some of [the market softness] was due to high pricing relative to PET and PP,'' Carruthers explained. ``Benzene [feedstock] was high but had started to work its way down, but '04 had been a real challenge.''
PS makers saw success with an Aug. 1 increase of 5 cents and have a similar move set for Oct. 1.
Through the first half of 2005, U.S. and Canadian PS sales were down more than 3 percent vs. the year-ago period. Longer term, Carruthers said Total expects the market to grow 1-2 percent annually for the next few years.
Pat Duke, a market analyst with DeWitt & Co. in Houston, agreed, saying that PS ``is a mature product, but because of its ease of processing you can run it on older equipment - so it's going to stick around.
``The food packaging market remains good and the foam insulation board market in construction is still there, so [PS] will grow with the economy,'' Duke said.
But he cautioned that PS makers have not discovered a way to make the material compatible for more technical applications.
``ABS and polycarbonate are still in front of [PS] from a technical standpoint,'' Duke said. PS ``is still a good, low-cost product for everyday applications, but I don't know if people are spending a lot of money to find a new polystyrene.''
GE Plastics' ABS plant in Bay St. Louis withstood Katrina pretty well, according to business director Charles Crew. Pittsfield, Mass.-based GE was working to bring the plant back into operation as of Sept. 19. Crew credited precautionary measures with reducing the hurricane's impact, and he added that supplies to customers should not be affected.
``We had lots of inventory and lots of contingencies,'' Crew said. ``This is one of four ABS plants we have in North America, so the other three were able to pick up the slack. We didn't have to place any customers on allocation.''
Pittsburgh-based Lanxess Corp., along with other ABS suppliers, announced hurricane-related surcharges of 4 cents a pound for rail deliveries and 6 cents for bulk deliveries effective Sept. 22. Styrenics sales manager David Gingras said Lanxess no longer can absorb increasing costs for natural gas, fuel oil and freight logistics.
Market prices already have increased 10-14 cents this year, after soaring an average of 24 cents in 2004. The 2005 hike took hold even as demand slipped almost 7 percent in the first half, when compared with a robust 2004. Another 12-20 cents remains on the table in 2005.
``We hope to end the year down only 5 percent,'' Gingras said. ``Demand in general has been a little bit softer than expected. Going into the year, we thought we'd maintain or grow a couple of percent.
``The first quarter was good but then customers began using up inventory. We didn't really lose market share to interpolymer competition.''
At GE Plastics, Crew said the overall market has been ``pretty steady,'' as his company has focused on balancing core volumes and growing into the higher-performance range with flame-retardant, high-temperature and colored products.
``We want to add more value to our customer base and use our application development technology,'' he said. ``At the same time, product like sheet and pipe will remain core markets.''
GE also wants to make colored ABS ``bigger than it's been,'' Crew said, noting that color is a great selling feature vs. blacks and naturals in consumer electronics, fluid engineering and medical applications.
Except for pipe and extrusion sales into the construction and remodeling markets, demand was down, said Herman Savenije, ABS business director of Florham Park, N.J.-based BASF Corp.
The expected styrene monomer shortage also will affect ABS, he said. ``It's going to take a while to recover,'' Savenije said. ``Katrina had a big impact, but I think Rita was underestimated.''
Polycarbonate growth might not be where it once was, but in 2005 the material is enjoying rates that commodity resins are not.
Globally, market leader GE Plastics expects a growth rate of 6-8 percent, with North America experiencing a little less than that, said business director Brian Gladden. One personal success for GE was its EXL silicone copolymer, a weatherable, temperature-resistant PC blend being used in electronics applications. But optical media has led the surge, particularly in the Asian market, he said.
Recordable DVDs keep growing, Gladden said, even though the base DVD market has been ``a little lumpy.''
``It really depends on big releases [of movies],'' he said, though the release of television shows and sitcoms in boxed sets also has helped DVD sales.
But RTI market analyst Greg Smith said the optical media market may be maturing: ``There's still some growth, but it's not like it used to be.''
Smith also suggested that some resin market activity in early 2005 - including 8-10 cent-per-pound price increases, after 25 cents took hold last year - may have been artificially created.
``2004 was a tight market, but in 2005 that started to change,'' he said. ``There was a general slowdown. Processors were buying ahead to beat the next increase. They were sitting on inventory in '05.'' Also, new capacity - from GE in Spain and from Teijin in Japan - ``affected market psychology and slowed things down,'' Smith added.
Gladden said GE's PC plant in Burkville, Ala., weathered the hurricane fairly well, though GE switched some shipments from rail to truck, to accommodate customers.
But the temporary knockout of North American capacity for phenol feedstock - about 19 percent, according to a CMAI estimate - could affect the PC market.
With APC reporting nylon sales down as much as 8 percent in the first half of 2005, nylon makers are hoping that stronger sales into consumer goods offset a softening auto market. Automotive traditionally accounts for 40-50 percent of nylon resin consumed.
RTI analyst Greg Smith said nylon demand has definitely decreased in 2005.
``Demand was very soft and it's hard to say how much will pick up in '06,'' he said. ``In automotive, nobody's expecting much from the Big Three. What strength there is will be from offshore automakers.''
Although auto builds fell in 2005, BASF sees growth in brand-new applications like automotive seat pans - made from plastic this year on several vehicles.
``There's potential in new applications and in replacing other materials in under-hood markets,'' said BASF marketing manager Joe Venner.
BASF has restarted nylon production at its Freeport, Texas, plant, which had been closed in advance of Hurricane Rita. Venner estimates the site lost about two weeks. Meantime, BASF has boosted global production and shipped nylon from Europe to handle shortfalls. North American nylon supplies still could be affected by outages affecting 80 percent of cyclohexane feedstock production, according to CMAI.
As for nylon pricing in 2005, it was a bit scrambled because of the splintered nature of the market, with specialty grades abounding.
``There were some increases where material was sole-sourced and no competing material was in place,'' RTI's Smith said. ``Some accounts saw as much as 10 cents per pound. But in more competitive situations, there was no increase. Some of the increases that did go through were because of higher prices for benzene feedstock and some were more leverage-driven.
``When you've got two companies - DuPont and BASF - with most of the supply in North America, they have a lot of control,'' he said.
Moving into 2006, Smith said nylon markets for film and fiber look good, especially in construction. No new resin capacity is set to emerge, although the market continues to struggle with overcapacity in the compounding sector, he added.
At a recent TPE industry conference, market analyst Howard Blum projected global thermoplastic elastomer growth of more than 5 percent for the near future. World demand in 2004 was estimated at about 4.2 billion pounds, with 45 percent in styrenic block copolymers and 35 percent in thermoplastic olefins and thermoplastic vulcanizates.
Blum, chemicals director for consultants Kline & Co. in Little Falls, N.J., said that TPEs ``have evolved as a value-added strategy for polymers.''
Tom Bell, sales and marketing director for TPE maker Septon Co. of America, agreed that the market in recent years has improved, ``with the diversity of styrenics and other TPEs.''
Pasadena, Texas-based Septon produces SBC TPEs. The company's plant there was not damaged by Hurricane Rita, but it did lose six days of production before restarting Sept. 27.
The long-running battle of TPEs vs. thermoset rubber in many applications should continue, with favor becoming more slanted toward TPEs.
``It's still a rubber vs. plastic issue,'' said Bell, who worked in the rubber market before venturing into TPEs. ``What's going to push business into TPEs is the search for cost reduction and design opportunities.''
Also making solid progress are TPEs used in compounds and alloys, he added. Moving forward, Blum said the half of TPE market growth will come from rubber replacement, the other half from new product designs. He also stressed the significance of Asia, which now has tied North America in demand, with each region consuming 35-38 percent of the world's TPE.