TPE demand to grow 6% per year.

A new study from The Freedonia Group forecasts demand for thermoplastic elastomers in North America will increase 6% per year to 1.3 billion pounds in the year 2000, with value forecast to increase 9.5% per year (significantly exceeding real growth in gross domestic product) to $3.7 billion. Most TPE demand is linked to durable goods, particularly motor vehicles and industrial machinery and equipment, and so the market will benefit from continued expansion of light vehicle production levels and solid gains in output of durable goods in North America.

Among the larger volume markets, transportation equipment will provide the best opportunities for growth. TPEs will continue to be used in automotive exterior components, and will gain ground in engine/mechanical parts and interior components. Among smaller markets for TPEs, applicances and business machines, medical products and construction will provide the fastest gains.

The TPE market is dominated by styrenics and olefinics, which accounted for 76% of total North American demand in 1994. Styrenic block copolymers and polyolefins compete price-wise with each other and functionally with primarily commodity rubbers such as styrene-butadiene, polybutadiene and medium performance elastomers such as EPDM. Among these two elastomers, olefins are expected to see the fastest annual gains, based on strong demand in automotive uses, especially bumpers, and smaller markets such as appliances.

The higher priced TPEs - urethanes, polyesters and specialty TPEs such as polyamides, collectively accounted for 24% of total North American demand in 1994. These lower-volume elastomers compete for many niche or specialty uses with mid-performance rubbers such as EPDM, polychloroprene and nitrile, and specialty elastomers such as acrylic and fluoroelastomers; and with engineering thermoplastics.

Among these elastomers, polyesters are expected to see the fastest annual gains, based on continuing diffusion into motor vehicle and industrial markets, and growing demand in smaller markets such as construction. Urethanes will remain a major elastomer in automotive and industrial markets, although their cost will continue to relegate them to niche markets. Additionally, olefins are expected to take market share in bumpers, one of the major markets for thermoplastic urethanes.

With TPE price increases forecast at 3.2% per year, the value of North American TPE demand is forecast to increase 9.4% per year to $3.7 billion in the year 2000. The average cost per pound for TPEs is forecast to reach $2.78 at that time. In part, average price will increase due to shifts in product mix favoring higher priced TPEs such as polyesters and polyamides. Also fueling increases in average cost will be strong demand in markets such as medical products, which generally require specialty materials.

Styrenic thermoplastic elastomers, or styrene block copolymers (SBCs), are the largest volume type of thermoplastic elastomer in the North American market. In 1994, demand of 441 million pounds accounted for 47% of total TPE demand. These elastomers will see slightly below-average growth relative to other elastomers, through the year 2000.

Demand for styrenic thermoplastic elastomers is forecast to increase 5.1% per year to 595 million pounds in the year 2000, slightly below average for the market as a whole. Although styrenics will remain the largest volume TPE and find continued strong usage in industrial products and motor vehicles, demand in the largest market, footwear, will remain weak due to intense off-shore competition in these products.

SBCs will remain the largest volume TPE material, although olefinics, polyesters and others will enjoy the fastest annual increases.

Olefinic elastomer demand is growing in motor vehicle, appliance, medical and construction markets. These products are benefiting from new polymerization technologies that have dramatically improved properties and processing ease. These new technologies have made olefinics more competitive in film and sheet applications, where they are competing against thermoplastic polyurethanes (TPUs). Reactor made TPOs will lead growth.

Continuing diffusion into motor vehicle and industrial applications, along with growing demand in smaller outlets such as construction products, will spur rapid gains in demand for copolyester elastomers (COPE). And although TPUs will retain important uses in automotive, industrial and appliance markets, these mature materials are facing intense competition from TPOs.

Thermpolastic olefins (polyolefins, or TPOs, including olefinic thermoplastic vulcanizates, or O-TPVs), with demand of 270 million pounds, accounted for 29% of total North American TPE demand in 1994.

There are three major classifications of thermoplastic olefins: compounded TPOs, reactor-made TPOs and olefinic thermoplastic vulcanizates. Current North American demand is divided approximately as follows: compounded TPOs hold about 55% of demand, TPVs hold about 25%, and reactor-made TPOs hold about 20%.

Markets for TPOs are heavily dominated by transportation equipment. Applications in this market are widespread and dominated by exterior parts.

Demand for thermoplastic polyolefins will increase 7.2% per year to 410 million pounds in the year 2000, with strong growth attributable to continuing demand from the large motor vehicle market and double digit increases in three smaller-volume markets: appliances, medical products and construction. In automobiles, TPOs are currently used primarily in exterior applications, but the easy in-mold coloring of TPOs is expected to increase demand for TPOs in interior applications.

The complete study, Thermoplastic Elastomers, is available from The Freedonia Group, Cleveland, OH.

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North American TPE demand by type (million pounds)

                          1985    1989    1994    2000
US shipments (bil US$)   2,335   2,793   3,369   4,480
$ TPEs/mil $ GDP           310     438     631     815
TPEDmd(mil US$)            724   1,223   2,125    3651
$/lb                      1.66    1.95    2.27    2.75
TPE demand                 435     628     937   1,330
 Styrenics                 241     305     441     595
 Olefins                    91     158     270     410
 Urethanes                  64      79      91     115
 Polyesters                 27      44      61      95
 Others                     12      42       74    115

North America SBC markets (million pounds)

                            1985    1989    1994   2000
US shipments (bil 87 US$)  2,340   2,581   2,988   3,476
lbs/mil $ shpts            103.0   118.2   147.6   171.2
SBC demand                   241     305     441     595
 Footwear                    119     127     146     171
 Industrial mach. & eqpt.     49      73     111     152
 Transportation eqpt.         28      39      68      98
 Appliances & bus. mach.      11      19      39      62
 Wire & cable                 12      15      20      26
 Medical products              4      7       16      28
 Construction                neg       1       6      11
 Other markets                18      24      35      47
Average $/lb                1.36    1.55    1.81    2.16
SBC demand (mil US$)         328     473     798   1,285

North America TPO markets (million pounds)

                            1985    1989    1994    2000
US shipments (bil 87 US$)  2,340   2,581   2,988   3,476
 lbs/mil $ shpts            38.9    61.2    90.4   118.0
TPO demand(*)                 91     158     270     410
 Transportation equipment     50      96     164     255
 Industrial products          17      27      47      68
 Wire & cable                 16      19      25      31
 Appliances & bus. mach.       7      12      24      38
 Construction                  1       3       7      12
 Medical products             neg      1       3       6
Average $/lb                 1.39   1.58    1.83    2.19
TPO demand (mil US$)         126     250     494     898

(*)Includes olefinic thermoplastic vulcanizates