Thermoplastic Elastomers -- Is It Still a Specialty Market?

PALO ALTO, Calif. -- Commoditization of the thermoplastic elastomers (TPEs) market in the United States is intensifying price competition among participants, leading to decline in profit margins and wholesale structural changes.

New analysis from Frost & Sullivan (http://www.chemicals.frost.com), U.S. Thermoplastic Elastomers Market, reveals that this market generated revenues worth $1.29 billion in 2003 and is likely to reach $1.72 billion in 2010.

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Various types of TPEs such as thermoplastic polyurethanes (TPU) and thermoplastic olefins (TPO) have experienced drastic decline in prices during the past two years, which has slowed overall market growth.

"The pricing pressure is only likely to worsen with the growing preference of end users to establish global supplier relationships, which will provide them with greater bargaining power," say Frost & Sullivan research analysts Vivek Tapuriah and Sumathi Rengarajan. "Additionally, lack of product differentiation is likely to push TPE suppliers further on the back foot."

Participants are also challenged by the increasing cost of energy/power and raw materials. Their inability to pass on these escalating costs to customers is further squeezing profit margins.

However, the shift from thermoset rubber and PVC to TPE in many applications is increasing its demand and this, in turn, is likely to drive market growth. End users prefer TPEs because they are easier to process and recycle, besides having greater design flexibility.

"Though the replacement rate is slowing in some applications as TPEs have already achieved high penetration rates, there is still scope for further replacement of thermoset rubber -- particularly in automotive sealing systems, medical products and consumer goods," informs Tapuriah.

Additionally, TPE market growth is likely to be aided by the global expansion of automotive and industrial companies -- two of its major end users. This is because many Asian countries -- particularly India and China -- have shown strong growth potential with a gross domestic product (GDP) greater than 6.0 percent in 2003, prompting many industries to start production facilities in the region.

"Increasing population coupled with rising income levels is likely to spur the growth of automotives and industrial markets in Asia -- and it is projected to be higher than the western countries including the United States," explains Tapuriah. "These developments are compelling TPE producers and suppliers to expand globally to cater to the burgeoning demand worldwide."

With customer groups more inclined to maintain one vendor for all their global requirements, large TPE suppliers are likely to step up the acquisition of small- and medium-sized companies. This will help them widen their product portfolio, achieve greater economies of scale, offer wide-ranging products at competitive prices and ultimately, gain greater market share.

"The potential fallout of industry-wide consolidation is the threat to the existence of small TPE manufacturers that cannot compete with the lower prices or the extensive product lines being offered by the giants," says Tapuriah. As a result, some smaller participants are likely to exit the market or cave into the pressure of being bought out.

The U.S. Thermoplastic Elastomers Market is part of the Plastics & Polymers subscription. It segments the market into six types: styrenic block copolymers (SBC), TPO, thermoplastic vulcanizates (TPV), TPU, copolyester thermoplastic elastomers (COPE) and polyamide TPE. The study discusses market drivers and restrains of each TPE product besides providing in-depth analysis of the competitive landscape and key strategies of participants. It also includes forecasts (for revenue and volume consumption) in terms of various product types and end users. Executive summaries and interviews are available to the press.

Frost & Sullivan, a global growth consulting company, has been supporting clients' expansion for more than four decades. Our market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies include custom strategic consulting, market intelligence and management training. Our mission is to forge partnerships with our clients' management teams, to deliver market insights and to create value and drive growth through innovative approaches. Frost & Sullivan's network of consultants, industry experts, corporate trainers and support staff, spans the globe with offices in every major country.

U.S. Thermoplastic Elastomers Market

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The following is a list of key industry participants: A Schulman, Inc.; Advanced Elastomer Systems LP; AlphaGary Corp.; American Plastic Council; Atochem North America; ATOFINA; Basell Polyolefins Company N.V.; BASF Aktiengesellschaft; Bayer; BP plc.; Chevron Phillips Chemical Company LP; Degussa; Dexco Polymers LP; Dow Chemical Co.; DSM Corporate Communications; DuPont; Dynasol; Ebbtide Polymers Corp.; EMS Chemie; EniChem; Equistar Chemicals LP; ExxonMobil Chemical Co.; Firestone Polymers; Formosa Plastics Corporation, U.S.A.; GLS Corp.; Huntsman LLC.; J-Von; KRAIBURG TPE Corp.; KRATON Polymers, Inc.; Kuraray Holdings U.S.A., Inc.; Merquinsa; Mytex; Noveon, Inc.; Polyone Corp.; RTP Co.; Solvay Engineered Polymers, Inc.; Star Thermoplastic Elastomers; Sumitomo Chemical America, Inc.; Teknor Apex Co.; Ticona; Zeon Chemicals LP.

Keywords in this release: thermoplastic elastomers, TPEs, U.S., styrenic block copolymers, SBC, thermoplastic olefins, TPO, thermoplastic vulcanizate, TPV, thermoplastic polyurethanes TPU, copolyester thermoplastic elastomers, COPE, and polyamide TPE, thermoset rubber, PVC, automotive sealing systems, commoditization, research, information, market, trends, technology, service, forecast.