Shifting market shares and high-priced raw materials are part of the new reality for makers of polyethylene, polypropylene and polycarbonate.
But if that new reality is dampening spirits in those markets, it didn't show at the 2007 Plastics News Executive Forum, held Feb. 26-28 in San Diego. At the event, officials with Dow Chemical Co., Basell Polyolefins and Bayer MaterialScience LLC each sounded optimistic about the future of resin, in spite of a laundry list of challenges.
``Polyethylene is healthy, strong and growing,'' said Howard Ungerleider, commercial vice president of North American plastics for Midland, Mich.-based Dow - and the largest maker of PE in the world. ``We're fully committed to polyethylene in North America and are working to expand in growing regions as well.''
Bayer MaterialScience President and Chief Executive Officer Greg Babe was equally upbeat, describing potential growth for PC as ``a building block'' for applications in the automotive, building and construction and light-emitting-diode lighting sectors. Bayer ranks as the world's largest PC maker, with 2.6 billion pounds of annual capacity.
Dow anticipates that global PE demand will average 4.5 percent annual growth through 2015. In terms of pounds, that will be the largest gain of any resin except PET.
Global growth for PC should average 8 percent for most of the next decade, Babe said. That rate would put capacity utilization percentages in the upper 80s and lower 90s. In North America, growth in PC demand should be 2 percentage points higher than the growth of gross domestic product, even without high-volume new applications like flat-screen TVs and automotive window glazing, Babe added.
In PP, growth should follow the historic model of being 1½ times that of GDP, according to Michael Mulrooney, president of North American operations for global PP leader Basell.
``Polypropylene has averaged 6 percent growth since 1980 because of its versatility,'' said Mulrooney, whose operation is based in Elkton, Md. ``It typically tracks overall economic growth.''
But growth in North America won't come as easily as it has in the past, since the region is maturing as a plastics market.
``The new reality is that North American polyethylene production has to be consumed by North American demand,'' Ungerleider said. ``Resin equivalents in film, bags and other finished goods pose a threat for North American resin producers and converters. That takes up 2.2 billion pounds of resin per year, which is equal to 7 percent of the market.''
Ungerleider added that rising demand and lack of new capacity will result in North America becoming a net importer of PE by 2010-11.
A good portion of that new demand will be met by resin from the Middle East, where abundant supplies of low-priced feedstock make new capacity more affordable, he added.
North American PE plants also will see higher operating rates as a result of these trends, Ungerleider said.
Basell's Mulrooney pointed out that PP sales in the U.S. and Canada actually fell in each of the past two years, in spite of the material's popularity.
``That doesn't mean less products are being made of polypropylene,'' he said of regional sales declines of 4 percent in 2004 and 1 percent in 2005.
``Domestic resin sales have been slowed by imports of finished products in auto parts and toys and intermediate products like film.
``Many applications also use less polymer. We've been a victim of our own success in areas like thin-wall injection molding.''
Raw material and energy costs are up for every resin, but have been especially damaging in PC, where Babe said recent PC price jumps of 20 percent are still 30 percent shy of the increases seen in raw materials such as benzene. PE also is being affected by lower supplies of feedstock alpha olefins such as butane, hexane and octane. Global supplies of those materials fell by 650 million pounds between 2003 and 2006, Ungerleider said.
Expected increases in global ethylene supplies also have been delayed until 2009 at the earliest because of project holdups and cost overruns, Ungerleider added.
Bayer's future North American PC policy calls for investment and streamlining based on demand in the region. Basell's only pending capacity boost will come through a Mexican joint venture with Monterrey, Mexico-based Indelpro SA.
In spite of those challenges, hope for PE, PP and PC lies in several new applications.
Mulrooney pointed to PP replacing other materials in ice cream containers and clear beverage and deli containers.
Bayer is still bullish on using PC in auto window glazing, where Babe said the material can offer significant advantages over glass in the areas of safety, styling, design and weight reduction.
In building and construction, Babe said PC is finding a home in stadium roofing, where it resists blasts and ballistics. Bayer's PC is being used on the roof of an Olympic stadium in Beijing. The material also was used in roofing at the 2004 Olympics in Athens, Greece.
In LED lighting, Babe said PC is more energy efficient, more compact and requires less maintenance than incandescent lights.
PE growth is expected to come from pressure pipe in high density PE and flexible packaging for food and specialty applications in linear low density PE, Ungerleider said. And even though standard low density PE ``had been written off as a dead polymer,'' according to Ungerleider, competition between LDPE and LLDPE largely has ceased.
He added that PE film continues to take market share from other materials in bags for pet food, concrete and charcoal.
Dow, Bayer and Basell each also are looking to the future where environmental and sustainability issues are concerned.
``We believe polyethylene is a sustainable material,'' Ungerleider said.
``Whether that's bio-based or renewable or compostable or biodegradable. The triple bottom line is in being economically viable, socially responsible and environmentally sound.''
To that effect, Dow has reduced its energy consumed per pound of product by 40 percent in recent years and wants to reduce 25 percent more by 2015.
Ungerleider also contends that HDPE produces less waste and greenhouse gases and uses less total energy than competing polymers made from organic materials.
And industrywide, he said, progress in downgauging for PE stretch film has saved billions of pounds of PE each year - the equivalent of 300 million gallons of gas.
``It's full life-cycle thinking,'' Ungerleider added.
Bayer's Aura-brand color technology now allows PC sheet to be reprocessed and recovered, while Basell has worked to meet environmental approvals for flame-retardant grades of PP.
>From Mulrooney's vantage point, work needs to be done on a psychological level, not just in physical applications.
``In the 1970s, the U.S. was the biggest consumer and producer of steel in the world,'' Mulrooney said. ``Now we're fourth behind Russia, Japan and China, because the steel industry didn't restructure until after significant damage was done.
``Now, we should do what America does best, which is excel at innovation and service. The creativity of U.S. companies is unmatched anywhere.''