Two outta three ain't bad. That might be how Charlie Crew would summarize current conditions for the three major end markets served by Sabic Innovative Plastics US LLC's broad range of engineering thermoplastic resins.
Crew, president and CEO of the Pittsfield, Mass.-based materials giant, provided a status report on market conditions and various corporate projects in an April 20 interview at the booming Chinaplas 2010 show in Shanghai.
In summary, Crew noted, the automotive market has “gotten better,” the consumer electronics business “continues to grow” (to include cell phones, personal computers and a particularly hot flat-panel television sector), and building and construction is “still very slow.”
“Two of the legs of the stool are performing much better than they were in the first half of last year.” In all, Crew suggests, “the rebound has been fairly sharp.”
“I would say, generally speaking, there is market expansion. People are back to running programs. [Original equipment manufacturers] are back doing projects again. I think that for a period of time, people were trying to get through the storm and some of these programs were shelved, and we see some of those programs coming back in.”
So how real is this rebound? Crew doesn't pretend to have the answer.
“I think it's the same question in a different environment [than last summer]. So I think the question is: 'How much of the pickup in demand is based on pipeline refill and how much is it sustainable demand?'
“If you talk to customers in the market, they don't have long-term visibility, whether it's an OEM or a processor. There's still this window of 'I can't see beyond three to six months.' They have better visibility in Asia, because the supply chain is longer.”
Still, he said, “We're optimistic about it,” noting positive projections for both the automotive and consumer electronics industries.
It didn't hurt that Saudi Basic Industries Corp., Sabic IP's parent company in Riyadh, Saudi Arabia, reported April 18 that its 2010 first-quarter results had swung to a profit, based in part on significant improvement in its engineering thermoplastics business. Sabic had suffered its first loss in seven years in the first quarter of 2009.
As previously reported, Sabic IP had cut resin output in the latter half of last year to bring supply more in line with depressed demand.
In addition to shuttering a couple of facilities altogether, “we manned for a drop in volume of about 20 percent. We're bringing back people now. But it's not like turning a light switch on. It does take time to get supply chains set up, get the guys back in,” and update and retrain those reinstated employees.
Feedstock shortages have been challenging, according to Crew, particularly in butadiene and fiberglass. Benzene, a key feedstock for Sabic IP, also is up, while he says butadiene prices are almost at record levels.
“These raw materials are up significantly, and as a result, we have to make sure that we're passing through [such costs], so we've announced [polymer] price increases. We're in a very tough inflationary cycle.”
On the automotive front, Crew described Europe as flat, the Americas as up and Asia, particularly China, as “pretty strong.”
Engineering resin demand is strong for televisions, especially as flat-panel units get larger and related technologies, such as for liquid-crystal-display screens, continue to evolve rapidly.
“We're participating with the global leaders in that,” Crew noted. The manufacture of TVs is spread around the globe, since the products are fairly large and fragile and the original equipment makers wish to minimize shipping costs. Many such TVs are made in South Korea, China, Mexico and Eastern Europe.
Crew said that 25-30 years ago GE Plastics — as Sabic IP used to be known — was quite active in supplying television manufacturers. That gives it an advantage today, since the firm is well-placed to understand the market and customers' needs.
“We've been able to penetrate very nicely as they've kind of retooled their package, if you will, to their customers. … Our model is that we work with the OEMs on the early design stage, on material development and then make sure that we're capable of servicing their production locally — and offer the same product on a global basis.”
On the other hand, building and construction — which encompasses everything from fluid engineering to electrical hardware, to sheet and film — is still pretty slow. Globally speaking, Crew noted, construction is doing pretty well in China and India, since they're funding infrastructure projects, while Europe and North America are still pretty flat.
Meantime, other promising markets continue to evolve. These include health care, and a variety of infrastructure sectors — for transportation, telecommunications (fiber optics for computing and “smart meters” for monitoring utility usage), electrical distribution, and alternative energy (connectors and boxes for motors and transformers used in solar energy).
He described the solar energy market now as “sort of like where the computer industry was back in the early '80s. There's a lot of players out there, there's a lot of ways that this technology can grow, and we're trying to play with as many of those players as possible, so that we're positioned with the right product solutions that evolve out of this kind of new market space.”
Crew also gave brief updates of various corporate projects:
* The Sabic joint-venture Lexan polycarbonate resin plant in Saudi Arabia (for which Sabic IP is the exclusive sales and marketing agent) is due to come on-stream early in the second quarter of 2011.
* Sabic IP's Ultem polyetherimide resin plant in Cartagena, Spain, is due online in the second quarter of 2010.
* The third phase of the firm's expansion of engineering thermoplastics compounding capacity in Nansha, in southern China, is now all but complete, confirmed Peter Chan, Sabic IP's president for Greater China.
* The feasibility study continues regarding a possible polycarbonate joint venture plant in China with Beijing-based China Petroleum & Chemical Corp., or Sinopec, Chan said.
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