Demand for precipitated silica to rise 4%.

The world market for precipitated silica and sodium aluminum silicates is forecast to grow 4% per year to 1.5 million metric tons in 2010, up from 1.1 mmt in 2003, according to a new market research report by Notch Consulting.

Precipitated silica is a highly versatile product, due to both its inherent properties and because its manufacturing process is quite flexible, allowing the production of a wide variety of grades with a range of physical properties. Most of silica's major applications take advantage of its unique surface structure, its good flowability and its high adsorptivity characteristics.

Silica's largest volume use is as a filler in rubber and plastics, where it improves tensile strength, hardness, tear strength and abrasion resistance. Other uses are as liquid carriers and as anti-caking agents. Silica serves as a thickener and rheological agent to control flow properties in products as diverse as toothpaste, cosmetic creams and lotions, and paints, coatings and adhesives.

Rubber market outlook

World demand for precipitated silica used as a reinforcing filler in the rubber industry is forecast to exceed 800,000 metric tons in 2010, from about 600,000 mmt in 2003. By 2010, rubber applications will account for 55% of total precipitated silica demand. Precipitated silica competes primarily with carbon black in rubber reinforcement applications.

As has been the case over the last decade, rising demand for fuel-efficient green tires, which rely on a filler system consisting of highly dispersible silica and organosilane coupling agents in the tread to reduce rolling resistance, will be a major factor behind growth in tire markets. Gains will reflect the greater penetration of green tires into the North American and Asian tire markets, expanding the solid position these tires already hold in the European Union (where green tires are now standard for OE passenger tires).

Japan is a particularly attractive long term market for green tires given its high fuel costs, well developed highway infrastructure and high levels of car ownership. In addition to fuel efficient tires, silica is finding greater use in the tread compounds of winter tires and high performance tires.

While well in excess of the tire industry, projected gains for precipitated silica in the tire market is decelerating compared to past growth. Specifically, the European market for green tires has slowed significantly in recent years as the OE passenger tire market reached saturation levels, and this deceleration is not expected to be entirely offset by new growth in the replacement market, which remains small due to a lack of consumer awareness or interest in green tires, as well as their higher cost and potentially shorter service lives compared to conventional radials.

Penetration in the U.S. OE passenger tire market has risen to about 20%, but is unlikely to rise to European levels without tighter fuel economy standards.

Other factors behind slower growth for silica in tire applications include minimal penetration into truck tires; competition from other types of 'eco-friendly' tires (such Goodyear's BioTred tire, which uses a corn starch filler); and a significant cost disadvantage compared to carbon black.

Mechanical rubber goods markets for silica are largely mature, with growth of 3-4%/year. Though more costly than conventional grades, HDS grades of silica are finding new applications in certain severe service items, such as conveyor belting, where they offer advantages similar to those in tire treads. Footwear applications have seen a profound shift over the last decade, where Asia, primarily China, now accounts for 75% of the world's demand for silica used in shoe soles, a reflection of the dominant position the Pacific Rim holds in footwear manufacturing based on its labor cost advantages. Footwear markets for silica are growing 4%/year.

Demand for precipitated silica

Item                2003    2010f    % AGR

Demand             1,103    1,460      4.1
  (000 mt)
Avg. U.S.           0.88     1.00      1.7
  $ per kg
Market value         975    1,455      5.9
  (mil. U.S. $)

World demand for precipitated silica by region (2003)

European
Union       31%
Asia        34%
NAFTA       24%
Other       11%

Note: Table made from pie chart.