Currently, the market is passing through a difficult phase and has to overcome numerous challenges that stand in the way of continued growth. Prime among these challenges is the rocketing prices of crude oil and its derivatives. This trend has affected almost all manufacturers of organic chemicals, including polymer foam suppliers. Suppliers such as Dow had to increase its methylene di isocyanate and toluene di isocyanate prices three times in 2004. Similarly, BASF – another major supplier to the polyurethane foam industry – raised the prices of its Pluracol polyol products twice, in 2004 and early 2005.
Compounding this challenge is the fact that most end users, particularly those in the commodity segments of comfort and packaging applications, are extremely cost conscious and unwilling to absorb these price increases. Therefore, participants that can pass on price increases to their customers and manage to retain them even if they have more appealing options are most likely to be successful in the market.
With many companies now relocating their manufacturing bases to eastern European countries offering cheaper labour, many polymer foam suppliers – especially those catering to specific end user markets such as expandable polystyrene in packaging – will see a significant erosion in their customer base. Although companies located in western Europe can continue to service customers in eastern Europe, the cost of transporting products will make them less competitive than regional suppliers.
Targeting new application areas will call for enhanced product development and suppliers will have to allocate considerable resources to this end if they are to stay competitive. In fact, product development is likely to be a major driving force for polymer foams to break new ground in high-end applications.
With environmental regulations becoming stricter, companies will also need to look into improving the public perception of polymer foams. The public still considers polymer foams as harmful, primarily because of their use of blowing agents. Though many manufacturers have moved to environmentally-friendly blowing agents, this has adversely affected the process economics as the alternatives come at a high cost.
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