Polyester polyols usage near 600,000 mt.

Consumption of polyester polyols is estimated to have been 594,429 metric tons in 1998, according to a new report by IAL Consultants, London. The report presents an overview of the glob al demand for, and production of, aliphatic polyester polyols within the main markets of the polyurethane industry.

Leading manufacturers of polyurethane raw materials have shown an increasing amount of interest in adipate-based, aliphatic polyester polyols worldwide, due to the premium prices achieved by polyurethane products and systems containing these polyols. Both production and consumption of polyester polyols is strongest in Western Europe, where the market is the largest and most established.

A tightening in the supply of these polyester polyols arose during 1997 and persisted throughout a large part of 1998. This was due, in part, to a shortage of adipic acid and a sudden growth in demand for polyester foams and elastomers from the European automotive industry. As a result, plans were announced to expand both adipic acid and polyester polyol capacity in Europe.

Demand in the Americas has remained reasonably stable during the past five years, due to the dominance of polyether polyols. However, investment in South America by European car manufacturers, as well as developments in the footwear industry, have led to an increasing amount of interest from European polyol and system suppliers. Despite optimistic growth rates of 7-9% per year, a significant increase in global production capacity is not expected. This is mainly due to the large capital cost involved in building a plant to supply the small and mainly fragmented global end-use markets. There has been some interest in developing new polyester polyol capacity in Brazil due to high import tariffs, IAL says.

In Asia-Pacific, demand for polyurethane shoe soling and specialty foams continued to grow. A considerable volume of this demand is met by imported systems from Europe and North America. However, a number of new systems houses and polyol blending plants has been opened by companies such as ICI, Dow and BASF to supply the PU industry from local plants.

Global production of polyester polyols during 1998 has been estimated to be 664,200 mt, split as follows:

* Europe - 66.4%

* North America - 9.2%

* South America - 1.6%

* Japan - 7.2%

* Rest of Asia - 15.6%

An accurate figure for the total manufacturing capacity is difficult to obtain, since many polyol manufacturers have small production units that can produce a few thousand tons each year if needed. This is especially true for systems houses that often have a small production capacity that can be activated when necessary for captive consumption.

An estimated 594,429 mt of polyester polyols were used during 1998, with elastomers accounting for 43% of that total. Flexible foam was next at 18.2%, followed by coatings with 17.5%, synthetic leather 12.6%, and adhesives and sealants accounted for 8.7% of the market, according to the study.

Comparing production capacity and consumption suggests that the supply/ demand situation is close to balanced, assuming that all the plants are operating at around 90% of capacity. The report says that any further significant growth in demand can only be achieved through a comparable expansion of capacity.

In all the markets, except for Japan, the use of polyester polyols in elastomers is the most important end-use application.

Consumption of polyester polyols, outside of the flexible foam business, is highly fragmented and difficult to track. This is due to the considerable volume of material supplied to end-users via a network of distributors, polyol blenders, systems houses and resin manufacturers.

As for the future, IAL's study says consumption of polyester polyols in the footwear elastomers industry is expected to fall, due to the introduction of new soling materials, as well as the use of a growing volume of polyether polyols. The current split of 85/15 polyester/polyether polyols is forecast to be nearer 50/50 within the next 10 years.

The future demand for polyester polyols in the adhesives, sealants and coatings industry is less certain, due to the global move towards solvent-free, high solids and water based-products, which use more acrylic based polyols. Simultaneously, these markets are showing only small growth rates in most of the major geographical markets. Therefore, since these applications account for over 25% of global polyester polyols consumption, the future for these polyols may be in jeopardy unless new markets can be developed for these highly flexible raw materials.