Chemforecast Plastic additives supply shifts

Supply of plastic additives for the next 12-18 months looks secure and pricing spikes are beginning to ease. But buyers may have to look to new regions for continued supply.

Fred Gastrock of Townsend Polymers Services and Information in Houston forecasts global sales to hit 27 billion lbs in 2009, but the regions of supply are changing.

“Additive plants are moving toward the markets,” according to Gastrock, who points out that developing countries first build polymer plants, then resin plants and finally additive plants. However, currently there is still a strong international trade in polymer additives.

Regions and countries where additives production is growing rapidly include China with a growth rate for additives production of 8-10% by volume annually. In much of the rest of Asia and in the Middle East the annual growth rate is in the “high single digits” according to Gastrock. Production in India, Russia and Turkey is growing rapidly from a small annual production base of 10 million tons, 5 million tons, and 3.3 million tons respectively.

Philadelphia-based Rohm and Haas provides an example of the globalization occurring in the additives industry. The firm is working with Turkish firm Polisan on several projects, including a partnership for the manufacture of emulsions for the paint market. Late last year, Rohm and Haas signed a letter of intent and announced that it is in the final planning discussions with Polisan to construct a plastics additives plant in Gebze, Turkey. The plant will produce acrylic impact modifier and processing aids. Planned capacity is 40,000 metric tons annually.

Meanwhile, in China, Rohm and Haas and China’s Weihai Jinhong Polymer signed an agreement last January to form a new joint venture. Jinhong Rohm and Haas Chemicals Company Ltd. (JinHaas), intends to manufacture a complete range of quality plastics additives products and provide technical support to the building and construction and PVC packaging segments of the Chinese market according to Rohm and Hass’ Joan Hoffmeier Gorrell, business manager for building and construction, and Bill Magee, business manger for packaging, durables and transportation. The joint venture is currently awaiting Chinese government approval.

While the U.S. is not building new plants, there are few shutdowns of existing plants. For example, Rohm and Haas intends to meet slowly growing domestic market needs though its existing U.S. plants. In Europe, there have been some recent plant shutdowns. For instance, Chemtura is shutting down some antioxidant plants according to Gastrock.

Rohm and Haas, Chemtura and Ciba produce a broad range of additive types. Other sizable producers are Arkema, Rohm and Haas, Albemarle and Baerlacher. Major plasticizer producers include ExxonMobil, BASF and Eastman Chemicals according to Gastrock. He notes that large independent compounders include PolyOne, A. Schulman, Clariant and RTP.

Demand for U.S. additives is growing 3-4% by volume annually. European sales growth is slightly less, at 2-3%. Japanese sales growth is less than Europe’s. Asia sales are growing rapidly as new polymer plants come online.

Plasticizers constitute 55% of the total additives market. The various market components and their relative size (see chart).

Gastrock forecasts overall U.S. additive sales will grow 3-4% annually through 2009. The additive types increasing faster than this average are growing from a smaller base. These include light stabilizers and nucleating agents (clarifying agents). Polypropylene additive use is growing slightly faster than the average. Additives used in wood–plastic composites are also growing more rapidly than average but from a small base.

The big feedstock price surge in 2004 through early 2006 that pushed additive prices up 20-50% has slowed considerably. Margins have improved and additives producers have been able to manage most of the raw materials price increases.

Hoffmeier Gorrell and Magee “expect raw material pressures to continue to be driven by supply and demand dynamics in the feedstock industries.” Raw material prices remain extremely volatile,” they note. For example, since the fourth quarter of 2006, the cost of tin has doubled. In the first six months of 2007, Rohm and Haas announced increases on its Advastab tin-based heat stabilizers totaling 17%. An additional 10% increase went into effect on June 15.


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