Specialty elastomers demand to increase 3%.

As world light vehicle production recovers from the recession of the early 1990s, world demand for specialty elastomers is forecast to increase 3.1% annually, reaching 2.2 million metric tons in 1998, a recent study by Freedonia states. However, annual growth in specialty elastomers will slightly lag that of light vehicle production due to several key trends. First, some high volume specialty elastomers are being displaced by competitive materials such as thermoplastic elastomers. In addition, automotive downsizing will negatively affect growth as it reduces the amount of rubber needed per vehicle. Finally, a significant component of demand for automotive rubber parts is linked not to motor vehicle production levels but to the replacement requirements for the numerous vehicles on the road, and this sector generally exhibits slower, more incremental expansion than vehicle production levels.

The entire specialty elastomer market will benefit from increasing light vehicle production and rising world vehicle utilization rates. The outlook for individual elastomers will vary widely, however, based on inter-elastomer competition. Freedonia analysts predict that more advanced polymers -- mainly thermoplastic elastomers and some of the low volume specialties (e.g., fluoroelastomers) -- will cause displacement and restrain greater gains, especially for more mature elastomers such as polychloroprene.

Ethylene-propylene rubber will enjoy the most favorable growth (despite displacement in some applications) due to growing use as an additive to thermoplastic elastomers and in roofing systems and geomembranes. Both butyl and nitrile rubbers will see moderate gains, primarily due to demand for new versions of these rubbers (halogenated butyl and hydrogenated nitrile, respectively) that offer significantly improved performance.

Polychloroprene is expected to reverse declines based on both stronger motor vehicle production and efforts by producers to introduce improved versions of the elastomer. Among other elastomers, demand will be strong for fluoroelastomers, epichlorohydrin and acrylic rubber, which are primarily used as gaskets, seals, hoses and belts, especially in high temperature applications. Chlorinated polyethylene is experiencing increased demand in roofing systems.

In developing regions such as Central and South America and Asia, major investments have been made over the past decade to increase synthetic rubber capacity, especially commodity elastomers such as styrene-butadiene and polybutadiene. But in contrast to the trend in commodity elastomers, output of specialty elastomers has remained concentrated in the developed regions of North America, Western Europe and Japan. These regions will continue to dominate output throughout the forecast period for several reasons, most importantly the high capital costs and proprietary technology associated with establishing capacity, as well as the requisite commitment to research and development. Freedonia analysts note, however, that significant capacity expansion activity is underway in certain developing nations such as Brazil, South Korea and China.

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