EP elastomers to be impacted by new technologies.

Since they were commercialized in the early 1960s, EP elastomers - EPM and EP(D)M - have experienced no sudden breathtaking, revolutionary developments. Rather, product portfolios have slowly evolved, driven both by improved technology and market demands, gradually expanding the range of performance properties of EP elastomers. Technological changes have been incremental, not revolutionary. Meanwhile, other polyolefins technologies have been developing at an accelerated pace, some resulting in commercialization of elastomeric products that can compete against EP elastomers in a number of applications.

According to a new study by Chemical Market Resources, Houston, TX, two remarkable events have recently transpired that will significantly influence future technological developments in EP elastomers, as well as the markets in which EP elastomers now compete. These are:

* The impact of metallocene-catalyst technology on the polyolefins industry, including EP elastomers; and

* development of a gas-phase process for producing EP elastomers.

These developments, one stemming from the polyolefins industry, the other from the EP elastomers industry, will change the face of the EP elastomers business worldwide, according to CMR.

Major markets for EP elastomers include (1) automotive parts, (2) single-ply roofing, (3) TPOs and TPVs, (4) mechanical rubber goods, (5) wire and cable, (6) oil additives, (7) tires and tubes, (8) hoses and (9) appliance parts. EP elastomers consumption in 1998 totaled 650 million pounds in North America, 635 million pounds in Europe, 275 million pounds in Japan and 310 million pounds in the rest of the world, yielding a grand total of 1,870 million pounds. Overall, demand for EP elastomers is expected to grow at an average annual rate of 2.8% through 2003, reaching 2,145 million pounds in five years, according to CMR.

EP elastomers production capacity in 1998 totaled 807 million pounds in North America, 618 million pounds in Europe, 418 million pounds in Japan and 185 million pounds in the rest of the world, yielding a grand total of 2,028 million pounds.

Producers in North America are Uniroyal Chemical Co., Exxon Chemical Co., DSM Copolymer, Inc., DuPont Dow Elastomers and Bayer Corp. Union Carbide Corp. brought its gas-phase-based plant in Seadrift, TX on stream in January, 1999, that has a nameplate capacity of 198 million pounds.

EP elastomers producers in Europe are EniChem Elastomeri S.p.A., Exxon Chemical Europe, DSM Elastomers Europe, B.V. and Bayer A.G. Japanese producers include Japan Synthetic Rubber Co., Mitsui Chemicals, Inc., DSM Idemitsu Co. and Sumitomo Chemical.

Other suppliers include Kumho Polychem Co. (South Korea), Herdillia Unimers (India), DSM Elastomeros do Brazil (Brazil) and Jilin Chemical Industrial Co. (China).

CMR says opportunities abound for new types of EP elastomers and new-generation polyolefins to compete with conventional EP elastomers in a number of markets traditionally served by conventional EP elastomers, as well as new markets. Application of the new technologies for producing EP elastomers - metallocene catalysts and the gas-phase process - results in lower-cost plants, lower operating costs, superior product consistency and a unique, granular product form. New-generation polyolefins have begun to compete with EP elastomers in some market segments, notably wire and cable, TPOs and even single-ply roofing membranes. Competition from these new-technology EP elastomers and new-generation polyolefins is fierce, but producers of conventional products will not stand idly by, allowing their products to be displaced unchallenged. The emergence of these new technologies and new materials will spur producers with conventional processes to squeeze costs and develop new materials at an unprecedented rate.

CMR says the EP elastomers industry is facing changes at a rate not seen since its existence. New processes and catalysts that promise cheaper, more consistent products, new materials capable of competing in some segments with EP elastomers, the possibility of synthesizing new types of olefins-based elastomers, new applications that test the performance limits of EP elastomers, recent regional shortages of material - all these factors combine to make the EP elastomers industry a challenging one in which to participate.