TPE use to increase 6.4% yearly through 2001.

Demand for thermoplastic elastomers (TPEs) in North America is forecast to increase 6.4% per year to 1.4 billion pounds in the year 2001, according to a report issued by The Freedonia Group. Gains will continue to come primarily at the expense of natural and synthetic rubber, although TPEs are also increasingly displacing conventional rigid thermoplastics and metals such as steel and aluminum. The report cites the advantages of TPEs over competitive materials which include superior physical properties, colorability and paintability, ease of processing, and recyclability of waste without degradation of properties. The continued expansion of upper temperature ranges will also benefit TPE demand, since relatively poor high temperature resistance is an impediment to greater use in applications such as under-the-hood motor vehicle parts.

TPE production will outpace demand to reach 1.6 billion pounds as the region retains a significant trade surplus in TPEs. Nearly all regional production occurs in the U.S., which is the world's leading producer of all major generic types of TPEs.

Styrenic block copolymers (SBCs) will remain the largest volume type of TPE, although polyolefin TPEs (encompassing both compounded and reactor-grade TPOs as well as thermoplastic vulcanizates, or TPVs) will boast the market's strongest annual gains. SBC demand will benefit from stable expansion in adhesive and sealant applications, as well as rapid gains in asphalt modification, where the use of SBC modifiers significantly improves the properties and longevity of roofing and paving asphalt. Demand for SBCs used in molded and extruded goods and as a modifier for high impact plastics (such as polystyrene) will benefit from increased production of durables such as motor vehicles and appliances.

Although TPOs and TPVs compete against each other in certain applications, each material is distinct and has individual strengths. TPVs, being closer to rubber, are valued primarily for their excellent compression set and elastomeric properties, and are finding greater use in gaskets and seals or to provide a "soft-touch" feel to handles, grips and tool housings. Compounded TPOs are considerably harder, and are used widely in parts requiring greater rigidity than is available from rubber, but with more flexibility than is available from traditional thermoplastics. Thus far, compounded TPOs have found their greatest use in automotive bumpers, but use is expanding in interior motor vehicle parts and consumer goods. Reactor TPOs can be used similarly to compounded TPOs for many applications, but are also finding greater use in sheet and film applications, such as medical products. Much of this growth is attributable to new polymerization technologies, including metallocene catalyst systems from Dow and Exxon, which have dramatically improved the properties and processing ease of these materials.

Copolyester elastomers (COPE) are seeing rising demand across a range of end-uses, including industrial products and motor vehicles. Most rapid gains are arising in consumer and medical products (where COPE is used in medical packaging and wound dressings due to its excellent barrier properties). Thermoplastic polyurethane elastomers (TPUs) have important uses in automotive and industrial markets, and are finding new uses in consumer goods (particularly sporting goods such as in-line skates), but overall growth will be constrained by intense competition from new generations of TPOs.

Joint ventures have become the preferred method of participating in the TPE market due to an outgrowth of the hybrid nature of these materials, the high requisite research costs and the proprietary production technologies involved. Activity has been most intense in polyolefin TPEs, which currently supports three major joint ventures: Advanced Elastomer Systems (Exxon and Monsanto), D&S Plastics (Dexter and Solvay) and Montell Polyolefins (Shell Chemical and Ferruzzi-Montedison). Also Dexco Polymers (Dow and Exxon) is a major player in SBCs. Shell, the world's leading producer of SBCs with its Kraton line, produces under its own name at plants in the U.S., Brazil and France, but also participates in joint-venture plants in Germany and Japan. Other major TPE producers include EniChem Elastomers in SBCs; DSM in TPVs; BFGoodrich, BASF and Bayer in TPUs; and Du Pont in COPE.

SBCs to increase 5% yearly

North American demand for styrene-based thermoplastic elastomers, or styrenic block copolymers (SBCs), is forecast to increase 5% per year to 620 million pounds in the year 2001, as these materials remain the largest volume generic family of TPEs in the North American market. SBC demand will benefit from a favorable expansion in the North American economy, which should promote demand for adhesives and molded and extruded goods made from SBCs. These same factors will promote demand for various high impact plastics, where SBCs are used as modifiers. Strongest gains are arising in the asphalt modification segment, an outgrowth of increased spending for highway and street infrastructure repair projects and, more importantly, the greater use of SBCs to improve the crack resistance and durability of both road and roofing asphalt. However, gains in the footwear segment will be minimal at best, a result of continued declines in U.S. footwear production due to continuing intense off-shore competition.

The United States is by far the world's leading producer of styrenic block copolymers, and North America runs a substantial trade surplus in SBCs due to the strong position held by the United States in these materials. However, the U.S.'s traditional trade surplus was temporarily reversed in 1994 and 1995 due to the closure of one of Shell's primary production lines at its plant in Belpre, Ohio due to an explosion. This situation caused a serious shortfall of product in the U.S., and prices rose accordingly. Among the companies that significantly increased their imports to the U.S. during the 1994-1995 period were EniChem Elastomeri of Italy, Petrofina in Belgium and Industrias Negromex in Mexico.

Additionally, Dexco Polymers (the Dow/Exxon joint venture) expanded its plant in Louisiana by 30 million pounds per year in 1994, and other U.S. producers, such as EniChem Elastomers and Bridgestone/Firestone, pushed their plants as close to capacity as possible. In March 1996, Shell brought its refurbished K-1 unit back on-stream, boosting U.S. capacity by about 100 million pounds per year. This factor, as well as the new capacity from Dexco, allowed the region to once again establish a net export position in SBCs in 1996.

However, given these sizable increases in U.S. capacity, the industry is now approaching an overcapacity situation, especially for styrene-butadiene-styrene (SBS) materials. Some of this additional capacity will be absorbed by the expanding export market, but Asia and South America, two traditionally major export markets, are also seeing considerable capacity expansion activity. With North American net exports of SBCs forecast to reach 80 million pounds in the year 2001, production of styrenic block copolymers is forecast to increase 6% per year to 700 million pounds.

Styrenic thermoplastic elastomers are block copolymers that incorporate hard polystyrene segments with soft rubber segments such as butadiene, butyl and ethylene-propylene (EP rubber, or EPDM). Although a wide variety of commercial grades is available, styrenic block copolymers generally fall into three broad types: SBS (styrene-butadiene-styrene), SIS (styrene-isoprene-styrene) and SEBS (styrene-ethylene/butylene-styrene). A fourth type, SEPS (styrene-ethylene/propylene-styrene), is also available. The first two types are commodity products, while the latter two are generally classified as performance products, with the major difference being that the latter two types - SEBS and SEPS - have fully vulcanized elastomeric backbones, which increases price but also improves performance.

At the application level, styrenic block copolymers most commonly compete against commodity thermoses rubber and thermoplastic resins. Most current applications for SBCs have come at the expense of thermoses elastomers such as styrene-butadiene, polybutadiene, butyl and natural rubber, as well as, to a more limited extent, midrange elastomers such as EPR and polychloroprene. This competition is understandable, since these materials are all chemically and functionally similar. SBCs also compete against commodity thermoplastics such as polyvinyl chloride and metals such as steel and aluminum. In more recent years, SBCs have faced increasing competition from other types of thermoplastic elastomers, particularly commodity grades of TPOs (polyolefin TPEs) and TPVs (thermoplastic vulcanizates).

Home wiring to increase 16.9% yearly through 2001

The U.S. market for home wiring, which includes the wiring inside the home and the connection devices such as workstation outlets, is forecast to grow from $1.4 billion in 1995 to $3.7 billion by 2001, according to a new report from World Information Technology of Northport, NY. This 16.9% yearly growth will be spurred by the trend to upgrade existing home wiring to support high bandwith applications such as video conferencing or video on demand.

The need for improved home wiring is driven by the explosion of Internet access via home PCs, the establishment of home offices and the development of new advanced services to the home.

WIT says this represents the beginning of a new evolutionary stage. The first includes the basic services provided by telephone and cable, the second began with the automation of home lighting, utility control, etc. which requires an upgrade.

North American TPE demand by end use, 1996

Wire & cable           6%
Consumer products      9%
Contruction           13%
Industrial products   14%
Motor Vehicles        31%
Footwear               7%
Medical Products       4%
Thermoplastic elastomer supply and demand

                                  1987      1996      2001
North American GDP (bil 1992$)   6,503     7,921     8,980
lbs./mil. $GDP                      83      132        159
                                   (million pounds)
Thermoplastic elastomer demand    538      1,045     1,425
Styrenic block copolymers         273        485       620
TPOs and TPVs                     134        310       460
Urethane TPEs                      71        105       130
Copolyester elastomers             34         72       105
Other TPEs                         26         73       110

+ net exports                      83        98        185
TPE productions                   621     1,143      1,610

                                       % annual growth

                                       96/87          01/96
North American GDP (bil 1992$)          2.2            2.5
lbs./mil. $GDP                          --             --

Thermoplastic elastomer demand          7.7            6.4
Styrenic block copolymers               6.6            5.0
TPOs and TPVs                           9 8            8.2
Urethane TPEs                           4.4            4.4
Copolyester elastomers                  8.7            7.8
Other TPEs                              12.2           8.5

+ net exports                           --             --
TPE productions                         7.0            7.1