SCUP Report

Table of Contents

Abstract

Eight functional classes of specialty plastics additives are described in this report—antioxidants, antistatic agents, chemical blowing agents, flame retardants, heat stabilizers, impact modifiers, lubricants and light stabilizers (commodities such as plasticizers and fillers are excluded, as are polymerization catalysts and colorants). Summary data are provided for all world regions, and detailed market and producer data are provided for North America, Europe, Japan and China.

Each functional class in turn includes several product types. These products are produced by a wide spectrum of chemical companies, only a few of which produce more than two functional classes. Although there are many participants, two to four companies tend to dominate each functional type within each major world region. Additive customers include resin manufacturers, specialty compounders and plastics fabricators. The volumes of individual additive products are often quite small, and significant volumes of some of these additives are exported to customers throughout the world. Indeed, there is a growing recognition of plastics additives as a worldwide business, especially as companies broaden their participation by adding more functional types to their product lines. Another reason for a worldwide perspective is that many of the customers (i.e., the large resin producers) also operate worldwide.

While volume growth in the mature economies from 2005 to 2008 was small, prices (in U.S. dollars) gained significantly and consequently the total market value grew as well. Higher raw material prices, net margin increases, supply shortages for raw materials and an unfavorable exchange rate (from the USD import perspective) contributed to the strong growth of the market value.

The following pie chart shows world consumption of plastics additives:

The future growth of plastics additives as a class is tied largely to the growth of the resin industry and the end-use consumer segments it serves (e.g., packaging, automotive and construction). In turn, the growth of these consumer segments is tied strongly to overall economic growth, which this report assumes will resume at a modest pace following the downturn that characterized the early years of the new century. Overall volume growth for plastics additives in the major consuming areas is expected to average 0.8% per year over 2008–2013, and will be fastest (6.0–6.7%) in China and India. A slightly negative growth (–0.4%) is expected in Japan. The North American and Western European growth forecasts assume an average GDP growth rate of about 0–1% during 2008–2013 as a consequence of the economic crisis of 2008/2009. Growth in resins using these additives will follow GDP. The negative growth forecast for Japan and small growth rates for the Republic of Korea and Taiwan will likely result from a continuing shift of the production of plastics and finished goods from these countries to China, where labor and some raw material costs are much lower. Japanese additive producers hope they can continue to supply some of these customers via exports, but will face much stronger competition from highly cost-competitive producers in nearby Asia.

These developments in the East Asian market will continue to create export opportunities for U.S. and Western European suppliers of specialties. They will also present opportunities for producers in all three regions to form joint ventures with companies or government agencies in East Asian countries, especially China, to produce the required additives in that region. Increasingly, commodities from China and the Republic of Korea will be exported to all other regions of the world.

In South America, Brazil is the largest consumer of plastics and plastic products; hence it is a large user of additives. Brazil accounts for almost 50% of the 2008 South American plastics additive consumption, which in actual volume is significantly higher than that of Mexico. While U.S. and Canadian consumption is projected to increase at a slow rate, that of the South American countries is expected to be somewhat higher. In addition, over the next five years a production shift of about 10% to Mexico and South American countries is expected, because of the efforts of plastic producers and processers to offset the high costs of materials, energy, and fuel; slumping domestic car and home sales; threats of higher interest rates; and severe weather disruptions. The consequence of such a shift will be competition from Latin American manufacturers that have lower labor costs, taxes, and regulatory expenses.