The Resins Market

By Tim Wright, Editor | April 19, 2012

Resins suppliers reported modest recovery in 2011 and are optimistic that these improvements will continue into 2012.

The resins market improved slightly in 2011 over 2010 and suppliers are optimistic that 2012 will continue the upward trend.

“The uncertainty over the global economic recovery, with every region having some bad economic news over the course of the year, dampened consumer and commercial enthusiasm which was necessary to sustain the recovery,” said Thomas Hall III, senior market development manager, BASF. “The forecast for 2012 is positive with a growth rate for the coatings market in the two to three percent range.”

According to Hall, infrastructure is a hot market for 2012, which spans everything from painting bridges to building pipelines to transporting oil and gas across North America. “Although the automotive industry is forecasted to have a great year, the degree of innovation and the number of suppliers to that industry continues to diminish,” he said.

Specialty Polymers said it has achieved growth in all the different markets it serves. “Volumes in 2011 were much stronger than in 2010,” said Steve Reiser, vice president, sales and marketing, Specialty Polymers, Inc. “This strength has continued into the first quarter of 2012. If this pace continues, 2012 could be one of the best we’ve seen in a long time.”

Celanese Emulsion Polymers reported flat sales in mature coatings markets, but growth in emerging regions. “Our sales into the resins segment in coatings were fairly flat for 2011 versus 2010, mimicking what many of our customers were seeing in the mature coatings segments of the U.S. and Europe,” said Brad Moncla, marketing manager, Americas, Celanese Emulsion Polymers. “We did see an uptick in demand during 2011 in the emerging regions of Brazil, China, India and Thailand.” 

According to Moncla, the exterior coatings segment is a strong area to keep an eye on. “Research from the Paint Consumer Research Program, which is the research arm of the American Coatings Association, shows that exterior sales were a bit stronger than recent historical data for 2011 while consumer DIY purchases overall were fairly flat in the U.S.,” he said. “The continued growth of the low VOC, low odor market will also have a global impact for the foreseeable future.”

Environmental regulations and rising raw material prices are some of the key issues affecting the resins market.

“Some of the major challenges and trends facing the water-based polymers market today are the consolidation of suppliers and customers, the continued increase in raw material costs, new alternative technologies and a very mature market,” said Reiser. 

Resins manufacturers must deal with increasingly stringent regulations along with the trend toward lower VOC coatings in both mature markets and emerging regions.

“Paint producers globally are still talking about low VOC, low odor paints being a major trend in the market place,” said Moncla. “Even in emerging areas like Southeast Asia and Brazil, this movement toward low emission paint is starting to take hold.”

Along with the uncertainty about new environmental regulations that will impact the raw materials used in coatings, another major challenge will be the liability associated with recycling and disposal of old coatings, according to Hall. “These regulations will determine what resin technologies are sustainable,” he said.

Another challenge is the high cost of feedstocks derived from petroleum compared to feedstocks derived from natural gas. “This has shifted usage patterns among chemical makers, making propylene- and butadiene-derived materials more expensive and less available,” Hall said. “The major trends in the market continue to be increasing the life of coatings systems and reducing the labor cost associated with the preparation and application of coating systems.”

As the U.S. economy continues to recover from the economic downturn, resins manufacturers are preparing for increased demand.

“The economy has been a major driver for the industry globally since the start of the recession,” said Moncla. “Paint makers in the U.S. are cautiously optimistic in their outlook for 2012 with positive signs coming from the housing market. Europe continues to be guarded regarding its economy for 2012 as issues surrounding the Euro persist. Economists are predicting some of the best growth in China, Asia and South America.”

“The U.S. and global economy are the drivers for the growth of the resins market,” said Hall. “BASF is engaging our customers to develop innovative solutions for their coating systems. We understand that our customers need a supportive partner to help them provide new solutions to the problems they face in their respective markets.”

Specialty Polymers’ focus is on the U.S. and Canada markets and sees both of these economies getting stronger, especially the U.S. economy. “To take advantage of the improving economy, and the growth opportunities it provides, Specialty Polymers recently made some key hires,” said Reiser. “In addition, our raw material sourcing is now a worldwide effort. We were forced to do this as a result of the consolidations and shortages the industry faced over the past several years. This worldwide sourcing has helped us remain competitive.”

Emerging markets in China and India represent great growth opportunities for resins manufacturers.

“Paint products tend to be sold in the region where they are produced, therefore, there is not a shift in production to the developing regions,” said Moncla. “Instead there is a higher growth in these regions to meet the overall growing demand for higher performance paint products as compared with the developed regions of North America and Europe. Celanese does expect to see continued growth in China and the rest of Asia as well as South America.”

The respective economies of China and India are growing rapidly and will continue to have an impact on the supply and demand balance of the entire value chain including the raw materials used to produce resins and coatings. “There will be a need to increase the manufacturing capacity in the regions that are experiencing the growth,” said Hall. “However, in the future, the focus will shift more towards regional supply due to an increase in the cost to transport goods globally, and a reduction in the relative cost to produce goods in each region.”

To capture anticipated growth in market demand for high quality coatings, BASF’s coatings division has set up its first resin laboratory in China. The new resin laboratory in Shanghai forms part of the Asia Pacific Innovation Campus scheduled to open in the second half of this year at the Pudong site in Shanghai.

According to BASF, the coatings market in Asia Pacific was valued at €19 billion in 2011 and is expected to increase in size and importance at a steady pace. It is predicted to rise to €45 billion by 2025. BASF’s new resin laboratory will initially focus on technical service in resin manufacturing, including the qualification of raw materials in the region. Later, it will also address new resin development locally, offering customized resins that can be employed in various coating materials such as automotive OEM coatings and a myriad of industrial coatings.

The new laboratory has been outfitted with state-of- the-art technology that enables precise temperature and time control, which ensures that the outcomes of resin qualification and development are of the highest standards. The resin laboratory is currently situated temporarily at Caohejing Hi-Tech Park in Shanghai and will move to the Innovation Campus site in Pudong as soon as the new premises are ready.

Celanese recently reported it received key government approvals necessary to proceed with plans to modify and enhance its existing integrated acetyl facility at the Nanjing Chemical Industrial Park to produce ethanol for industrial uses. The unit, based on Celanese TCX ethanol process technology, is expected to startup in mid-2013.

Pricing is another issue that remains constant in the market. “Implementing price increases is time consuming and costly,” Reiser said. “With the constant increases in raw material costs over the past several years, it’s been difficult just keeping up with passing them on to customers. This in turn, makes it a challenge to maintain targeted margins. We’ve had several price increases over the past year; these have gone smoother than in the past. It’s as if everyone has become accustomed to the constant price increases handed down from the major oil and chemical companies.”

“Our products are sensitive to the cost of raw materials,” said Hall. “The information regarding the cost of raw materials, energy and transportation is transparent. Our relationship with our customers and clear communication help us to mutually understand the economic issues facing our industry and the changes in cost necessary to sustain it.”

Meeting customer requirements is a top concern for resin makers.

“Customers are faced with the opportunity to grow their business, but there are still many doubts about the growth rates in their respective markets,” said Hall. “Therefore, they want to shift many of the financial costs to sustain the recovery to their suppliers. This can be in the form of inventory management, transportation, technical service and product development. We see these as opportunities to engage our customers to understand the specific demands that they are facing and construct programs to assist them.”

BASF has introduced several new resins over the last year. For industrial coatings and protective coatings segments, it introduced Acronal Pro 80, a new primer for metal protection as well as two new hydroxyl functional emulsions for waterborne 2K applications—Luhydran S 938 T and Joncryl OH 8313. BASF also added new polyols to its line-up that have Rapid Property Development coupled with long pot life. Joncryl RPD 950-AC/P is a specialty acrylic polyol for solventborne 2K polyurethane systems in automotive refinish and general industrial applications. Its key feature is the balance of early hardness, fast cure and long pot life (pot life twice as long as dry through). It is supplied in VOC exempt solvents and can be formulated to VOC of 250 g/l (2.1 lb/gal). For general industrial applications, BASF has developed a similar rapid property development polyol, Joncryl 980-B. Joncryl 2970 is BASF’s next generation resin that provides the desired ‘wet’ look and water blush resistance to pavers, concrete and natural stone.

Celanese’s customers are still demanding resins for low odor, low VOC paints. “They are increasingly looking at balancing performance that their end-use customers demand with costs,” said Moncla. “To this end, many customers are now considering vinyl-based solutions when they previously only considered pure acrylics.” 

Celanese Emulsions launched Avicor 381 vinyl acrylic emulsion this year. Avicor 381 offers a drop-in alternative to existing high-scrub vinyl acrylic formulations. Last year, Celanese doubled the capacity of its VAE facility in its Nanjing, China facility to meet the growing demand for low odor, low VOC paint throughout the region.

Specialty Polymers said its customers demand innovative products and responsive service. “They want us to be easy to do business with and flexible in our approach,” said Reiser. “Customers are looking for products and services customized for their specific needs.  The mid-size and smaller customers in our marketplace are being ignored by the large companies. Customers are looking for a little respect, attention, help and service.”

Specialty Polymers has modified and improved its line of polymers for the concrete market. The company has also added three key positions—a director of operations, an applications chemist and a Midwest sales manager. Specialty Polymers, Inc. manufactures more than 250 different water-based polymers, which are the main ingredients in paint, wooden deck, roof and cement coatings, inks, and wood glues.
Wacker Expands Polymer Site in China and Builds Two New Production Facilities
Around €40 million investment at integrated production site in Nanjing; doubling of dispersion capacity to 120,000 metric tons per year; new plant for polyvinyl acetate solid resins.
Wacker Chemie AG is expanding its Chinese polymer activities by investing around €40 million in building two new production facilities at its Nanjing site. The Munich-based chemical group said it is expanding the site’s existing facilities for vinyl acetate-ethylene copolymer (VAE) dispersions by adding a new reactor with an annual capacity of 60,000 metric tons. This measure will double Nanjing’s VAE dispersion capacity to approximately 120,000 metric tons per year, making the complex one of the biggest of its kind in China. The new reactor is scheduled to come on stream in mid-2013. At Nanjing, Wacker is also building a new plant to produce polyvinyl acetate (PVAc) solid resins with an annual capacity of 20,000 metric tons. This plant is due for completion in early 2013. The main application fields for VAE dispersions lie in construction, coatings and adhesives. PVAc solid resins are used in industrial applications and to manufacture gumbase. Wacker’s fully integrated plant at Nanjing already produces vinyl acetate-ethylene copolymer dispersions and dispersible polymer powders for the construction, coating, adhesive and other industries. By bundling its Chinese polymer activities at a single site, the company expects to gain advantages and synergies, achieving economies of scale through a common infrastructure and energy supply. Additionally, it will be able to enhance its transport and logistical efficiency.