How did the resins market perform in 2009? How did this compare to 2008 and what are your predictions for this year?

Uwe Liebelt, group vice president, dispersions and pigments, BASF North America: The market for resins in 2009 was strongly influenced by the respective markets in which the end products are used. Products commonly used for printing, packaging, construction and general industrial applications were subject to the continued weak market conditions in these segments. Some of these markets were temporarily down as much as 40 percent or more in 2009 versus 2008.

Others such as the do-it-yourself (DIY) market segment didn't suffer that much because customers changed their consumption pattern. For example, instead of buying or building new homes, money was spent on repairs and renovations.

We definitely have seen the demand side improving during the first months of 2010 versus 2009. It seems as though this improvement goes beyond a simple refilling of the pipeline and we are confident that it will continue throughout 2010. However, different market segments will recover at different paces. In some areas, such as the publication sector, a significant upswing is aggravated by structural issues in the industry. Whereas areas like packaging might continue to benefit from an increase in online shopping.

Steve Wilson, coating resins marketing manager, Eliokem: The resin market began to rebound in 2009 likely to a level of 85 to 90 percent of the previous year. Some of this was due to the manufacturer's low inventories at the end of 2008. It is likely 2010 will resemble performance of 2009 because customers are watching inventory levels and monitoring working capital. Also, the construction industry is still lagging.

Jared Elliott, marketing manager, paints and coatings, Celanese Emulsion Polymers: The resins market mirrored the overall economy. North American GDP was down in 2009 over 2008. Our customers in both the paint and adhesives segments saw reduced demand year over year for their goods. Our customers are noting that the downward trend seems to have leveled off and they hope for a stable to slight increase in 2010.

Dimitri de Vreeze, business unit director, DSM NeoResins+: In 2009 we saw a decline in the lower end market demand. The crisis forced many companies in the long supply chains of resins to lower their stock levels, which resulted in lower demand for resins producers. Overall there was a decline of 10 to 30 percent versus 2008, depending on region, length of chain and type of end-market. Our outlook for 2010 is cautiously optimistic. Some of the major end markets for resins are down by five to 20 percent, so we don't expect that the resins volumes will return soon to the levels of 2007.

What are the major trends and challenges influencing the resins market today?

Uwe Liebelt, BASF: Key influencers for the resins market include regulatory and environmental conditions and market demand for improved performance and lower cost. The cost volatility and availability of raw materials used in the manufacture of resins also continues to have an impact.

Steve Wilson, Eliokem: Raw material price increases, specifically acrylic- and methacrylic-based monomers price fluctuations, is an issue as are raw material supply shortages. In addition, changing VOC legislation by region in the U.S. resulting in non-uniformity between the regional legislative environmental groups is a challenge because developing resins to serve one regional group may not meet the requirements in another group. Lastly, developing new technologies and maintaining acceptable pricing to the paint manufacturers continues to be difficult.

Jared Elliott, Celanese: The increasingly stringent VOC legislation continues to play a role in the resins market as coatings producers strive to balance the regulations and the high performance demanded by consumers. The growing "green" movement is also contributing to the push toward eco-friendly paints that have very low odor and can meet the various green certifications.

Dimitri de Vreeze, DSM NeoResins+: The main trend is sustainability. We see this in the stricter legislation, but also the demand for more environmentally friendly resins. Within NeoResins+ we are continuously looking for the use of renewable raw materials, materials with a reduced carbon footprint and products with an improved life cycle analysis.

How is the current economy in the U.S. and around the world affecting the market and what is your company doing about it?

Uwe Liebelt, BASF: 2009 was an unprecedented year globally for economic weakness is most markets. The market softness had a dramatic effect on the sales of raw materials for coatings. If we have learned one thing, it is that customers always value innovative products that help them to save costs, differentiate their products and innovate in their markets. This was true before, during, and after the crisis. With the integration of Ciba into our portfolio and by bringing all coating raw materials under one roof in the new Dispersions & Pigments Business Unit, we are now even better positioned to help our customers be more successful in the future.

DSM and Novomer using CO2 to develop coating resin Royal DSM N.V., headquartered in the Netherlands, and Novomer Inc., Waltham, MA/USA, recently signed an agreement to jointly develop a coating resin using carbon dioxide (CO2) as a raw material. This development agreement follows a cooperation agreement and an investment by DSM Venturing in Novomer in 2007. The joint development project will benefit from the broad variety of DSM's technologies and market access, in combination with the unique, efficient CO2 polymerization technology of Novomer. The chemistry and process technology for producing polymers from CO2 and propylene oxide (PO) will be developed by Novomer, while DSM will convert the polymers into resins and formulate them for target applications such as coatings, adhesives and graphic arts. According to DSM, initial results are encouraging and suggest that this project might lead to completely new and improved application properties in coatings. Given the fact that up to 50% by weight of CO2 is used as raw material, the production of these resins will result in an improved carbon footprint. The process is also expected to be highly efficient, enabling the replacement of conventional resins in a number of coating applications. Polycarbonate resins are widely known because of their superior performance and resistances and theoretically could find use in many types of coatings. Commercial use of conventional types has however always been limited due to their cost position and some weaknesses that are inherent in these products. The new CO2-based aliphatic polycarbonates to be developed by DSM and Novomer could potentially resolve these weaknesses. "DSM and Novomer are looking to develop the first polymer in more than a decade to enter the mainstream of the coatings industry," said Rob van Leen, chief innovation officer, DSM. "This exciting development can lead to a breakthrough that could change the coatings industry. Besides cost issues, these innovative coating resins also address environmental and performance issues."

Steve Wilson, Eliokem: The economic downturn has lowered the housing starts and general construction activity in the U.S. for more than a year. In general, consumers are controlling their spending a lot more than in normal periods. Both of these actions have led to a lowering of demand for architectural coatings, which of course has lowered the demand for resins, both solvent-based and water-based acrylic resins that are used in manufacturing these coatings.

Jared Elliott, Celanese: The resins market is a bellwether for the paint industry. The generally weak economy has taken its toll on both our customers' coatings and our resin production. This is true especially in North America and also in Europe. The Asian region showed signs of recovery much more quickly than the rest of the world.

Dimitri de Vreeze, DSM NeoResins+: The U.S. was the first economy to be hit by the crisis, which had its impact on China as an export nation. It is clear that a local crisis can have global consequences. Within DSM we have taken the required measurements in cost control and optimizing cash flows. However DSM has continued to invest heavily in innovation. In 2009 we opened a new waterborne acrylic factory in The Netherlands and a new multi purpose polyester factory in Germany in January 2010.

How is the current economy affecting the demand and production of resins in mature and emerging markets?
 

Uwe Liebelt, BASF: During the first months of 2010, we have seen improvement in demand for resins. As would be expected, emerging markets such as Southeast Asia continue to show higher growth rates versus the developed markets of Europe and North America. We should continue to see some production shifting to regions that can accommodate higher growth rates at lower cost. China and India will continue to be important growth regions for resins.

Jared Elliott, Celanese: China and India are definitely growing markets. There is no shift in resin production from the West to the East. Instead, it is a growth in production for these emerging markets. We announced the expansion of our VAE plant in Nanjing, China late last year that will be supplying these markets in 2011.

Dimitri de Vreeze, DSM NeoResins+: It should be noted here that there is not a real shift of resin production in the sense that production that was first taking place in Europe or U.S. is now being done in Asia and from there exported to the west. It is more a difference in resin demand growth between the regions. The export from Asia of products with ink or paint applied on them is replacing production of those products in the west, so the shift is mainly indirect. The crisis has affected demand in all markets, either mature or emerging. We see however that the local end market in China is recovering faster than the markets in U.S. or Europe. The crisis has not changed the basic reasons for the shift from Europe and the U.S. to Asia, albeit that current lower demand in the West will temporary delay some investments in Europe and the U.S. Legislation, packaging and transport costs as well as the lack of intellectual property enforcement are factors which prohibit the shifting of production of some resins to Asia.

How would you characterize the pricing situation in the resins market?

Uwe Liebelt, BASF: Raw material cost volatility and availability has been an issue, particularly since the third quarter of 2009. BASF has announced price increases as a result.

Jared Elliott, Celanese: It is no secret that raw material prices are again on the rise this year after a relatively stable time in 2009. We have seen particularly high increases in the acrylate monomers, which are also experiencing various supply disruptions. Our customers are very knowledgeable of the raw material trends and though no one ever wants a price increase, they understand the underlying issues.

Dimitri de Vreeze, DSM NeoResins+: Raw material prices have increased over the past few years due to the price increments of fossil fuels. DSM has managed to control cost but we had to pass some of the price rises on to our customers.

What are your customers demands these days?

Uwe Liebelt, BASF: The resins market is being driven by regulatory changes and demands for products with less environmental impact, improved performance and lower cost. The relative importance of these factors depends on the market, region and customer. Some examples of customer demands are consistency, supply security lower volatile organic compound (VOC) systems, and improved weathering performance.

Steve Wilson, Eliokem: Changing VOC legislation is of top concern for coatings manufacturers, however this is also an opportunity for resin manufacturers if they can develop resins to permit formulating within the VOC limits. This opportunity has recently prompted Eliokem to develop new resins for porch and floor coatings, low VOC horizontal concrete coatings and swimming pool paints and garage floor coatings. Continued consolidation of paint manufacturers creates new supply synergies for resin manufacturers. Regional companies are increasingly being acquired by larger manufactures, which changes our supply arrangements. Paint manufacturers would like suppliers to maintain pricing and in today's volatile pricing environment it becomes a challenge to maintain.

Jared Elliott, Celanese: Our customers are striving to be more competitive in their market space and have elicited our assistance in creating value in their products. Quite often, this means a drive toward a lower VOC or greener formulation, which will be introduced in the form of either a new brand or reformulated one. This is true across the various segments as DIYers want a more eco-friendly profile and contractors / specifiers aim to obtain green certifications.

Dimitri de Vreeze, DSM NeoResins+: Our customers show a cautious optimistic trend in demand, which is still depending on the end market development. We do see increased queries for sustainable products.

What end market areas are driving growth in the resins market? What areas are flat?

Uwe Liebelt, BASF: Different market segments will recover at different paces. In some areas such as the publication sector, a significant upswing is aggravated by structural issues whereas areas like packaging might see a stronger and more stable growth.

Steve Wilson, Eliokem: New technology in primer markets appear to be growing.Primers with enhanced stain blocking capabilities in a water based form are gaining considerable momentum.Remaining markets appear to be somewhat flat across the board from our perspective.

Jared Elliott, Celanese: As a reflection of the challenged real estate economy, the new construction paint market is down significantly in the U.S. and most economists are not expecting the new home market to recover until the second half of 2011. As most of the home improvement stores and paint manufacturers have said, the DIY market is the silver lining. Homeowners are spending the time and money to spruce up their homes and DIY paints are leading the charge. We have worked with many paint producers to create a more eco-friendly interior paint that appeals to the homeowner with its low odor and improved eco-profile. Celanese is helping to grow this niche through our line of EcoVAE emulsions for solvent and coalescent-free paints.

Dimitri de Vreeze, DSM NeoResins+: We see growth in mature markets due to the substitution of solventborne resins by more sustainable technologies like waterborne resins, UV resins and powder resins. In the end markets, we see that some of the larger end markets are down, especially the automotive and industrial construction markets. The flooring and joinery markets show stability while resin demand in the food, can, adhesives and graphic arts industries is growing.

New resins technology BASF recently introduced Joncryl 1522, a light- to medium-duty waterborne product for direct-to-metal coatings providing corrosion protection. In addition, BASF has developed high solids acrylic polyols with rapid property development in two component polyisocyanate cured coatings. Finally, the company has introduced several waterborne energy curing resins especially for wood coatings. With the acquisition of Ciba, BASF has added people, technology and products that complement its existing offerings. The addition of key product areas such as light stabilizers, photo initiators, formulation additives and antioxidants compliments the existing product offerings from BASF. Eliokem has introduced Hydro Pliolite 040. This water-based acrylic copolymer emulsion is designed specifically for high performance masonry coatings and utilizes an emulsified binding system (EBS) that is unique to Eliokem. This resin system is designed to penetrate into the substrate to allow better adhesion than conventional latex polymers. The EBS technology consists of a dissolved, solventborne polymer emulsified in water. This resin is ideal for concrete cure and seal products and can be formulated to comply with ASTM 1315. It forms a film while the water evaporates and leaves a dissolved polymer to penetrate and adhere to previously coated substrates that used a solvent-based or water-based sealer. Hydro Pliolite 040 is recommended for use in primers, exterior masonry coatings, tilt up and horizontal concrete membranes. Eliokem has also recently introduced Pliotec SA10, a styrene acrylic latex with excellent adhesion properties used in top and base coats for metal coatings; Pliotec SA40, APE-free carboxylated styrene acrylic colloidal dispersion used in tough, flexible and abrasion resistant coatings for concrete; and Pliotec PA20, a pure acrylic resin used primarily in universal primers and concrete sealers and stains. Celanese Emulsions Polymers has added a number of new products to its product portfolio.First, the company made two new additions to its EcoVAE line for low-VOC, eco-friendly paints including EcoVAE 405, which offers superior scrub resistance. In numerous lab tests, flat interior paints made with EcoVAE 405 show improved scrub resistance over paints made with vinyl acrylic and 100% acrylic resins. Second, Celanese introduced our EcoVAE 408 for freeze-thaw stable interior paints. This product is a breakthrough in creating a low VOC paint that is also freeze-thaw stable for use in colder climates. Evonik Industries recently added yet another innovative binder system,Silikopur 8080, to its Tego product portfolio. The new product imparts extra shine and functionality to surfaces of plastics, textiles and leather. Evonik Tego's Silikopur 8080 is ideal for protecting surfaces against environmental influences, maintaining their appearance and feel for a long time. The novel, single-component silicon-modified polyurethane dispersion stands out for its high flexibility and elasticity in hot and cold conditions. Once applied, the product can withstand temperature swings from -30 C to 50 C, without forming cracks in the coating. Additionally, it is easily diluted with water and dries at room temperature. After a short time, the treated surface shines with new properties, since the coating system creates a stain-resistant anti-stick effect. Silikopur 8080 protects wooden surfaces from abrasion and minimizes the typical creaking of leather. Environmental compatibility played a large role during the development of Silikopur 8080 and the product is free of the organic solvent NMP.