REGIONAL MARKET DYNAMICS
The PU elastomer business, like the other PU businesses, is in flux due to the growth of the Asian manufacturing economies, and the movement of production assets to Asia (Fig. 9.3) . At the same time, the growth of production capacity globally and regionally is not clearly in balance now, and may be more or less so in the future.
FIGURE 9.3 Approximate geographical industrial consumption of polyurethane elastomers for years (a) 2012 and (b) 2005. The graphs reflect migration of manufacturing to low-cost environments. The distributions do not reflect end-use consumption. AP, Asia-Pacific; EMEA, Europe, Mi-East and Africa; LA, Latin America.
This is most clearly illustrated by the PU elastomer fiber market that has seen prices go from $10-12 per pound of fiber to $4-5 per pound of fiber in a span of about 10 years. This deflation is occurring despite the inherent costliness of PU fiber processes and a global growth rate of about 6% per annum. PU elastomeric fibers will be covered in detail later in this chapter, but the remarkable commoditization of chemicals and products is also apparent in the case of PU elastomers.
The regional dynamics of PU elastomer markets are strongly influenced by macro-economic factors of overall economic activity that in turn influences the more direct factors of asset utilization within the PU industry . This is usually measured by comparing the ratio of production capacity and product consumption as a function of history, and projecting with more-or-less confidence into the future based on announced plant shutdowns, expansions, and new capacity. The data in Figure 9.4 show the trend and projection in both Europe and Asia for oversupply of isocyanates. While this analysis does not cover polyols, isocyanates are of course required for every PU elastomer, and the variety of polyols for elastomers is significantly more varied, complicating what should be a simple point. That is, as long as there is over-supply in the PU industry, prices will be depressed for feedstocks as well as final products [4, 5]. Should the global economy pick up substantially, a condition of short supply of feedstock could emerge, as was observed in the early years of the analysis of Figure 9.4, and prices could rise as will company profitability. However if there is capital for expansion, manufacturers may gamble by adding still more capacity in an attempt to corner more revenues in a potential boom, and frighten off capital-poor competitors from gaining economic health by raising prices [6,7]. Thus, the relatively dramatic point-to-point fluctuations of Figure 9.4 reflect the convolutions of many factors, both intentional and unintentional, within the industry.
FIGURE 9.4 Capacity utilization for isocyanate production in (a) Europe and (b) Asia-Pacific. Low asset utilization results in low prices or production assets being shuttered. Larger symbols are projections.
As alluded to earlier, while the number of applications that PU elastomers can be applied to is quite large, the elastomers themselves can be conveniently divided into being thermosetting or thermoplastic. The ratio of their consumption is about 75% thermoset and 25% thermoplastic. While it is impractical to break regional consumption into relatively small application segments, it is still informative to simplify the categories into just thermosetting and thermoplastic elastomers. Figure 9.5 shows the changes in regional PU elastomer consumption as certain key segments, particularly footwear, have transferred manufacturing from Europe to Asia. The mature economies
FIGURE 9.5 Regional industrial consumption of PU elastomers for the years 2002 and 2012 reflecting the migration of thermosetting elastomers, especially for shoe soles, to Asia. Units are MM lbs. (See insert for color representation of the figure.)
of Europe and North America (dominated by Western Europe and the United States, respectively) have nearly identical proportional consumption of thermosetting to thermoplastic elastomers. That consumption is somewhat skewed toward thermoplastics due to disproportionate use of thermoplastics within the automotive industry .