Additives For Plastics Handbook - (Chapter 3. The World Market)

CHAPTER 3
The World Market
Additives form a growing and valuable sector of speciality chemicals that has
been selected by a number of manufacturers as a business sector. It is difficult to
give an accurate estimate of the world market for additives for polymers, because
the figure depends very much on what is defined as an 'additive'. There are as
many different estimates as there are forecasters. Most tend to limit the field to
the so-called 'performance' additives - such as plasticizers, lubricants,
stabilizers, flame retardants, and anti-statics - that confer a specific property or
protection on the compound. This excludes fillers and pigments, but increasingly
significant portions of these are now also developed and marketed as
'performance' fillers or pigments, special carbon blacks, or titanium dioxides. So
it is not surprising that there is some difference in estimates, arising to some
extent from such overlaps.
As well as regular market forces, other forces acting on the additives market
include environmental and health issues, new technologies, inter-material
competition, strategic repositioning for increased shareholder value, and
Copyright © 2001. Elsevier Science & Technology. All rights reserved.
customer-driven factors.
3.1 World Consumption of Additives
While the volume of additives worldwide increased by 6% from 1996 to 1998,

value actually fell, by 1%, due to the Asian crisis. Trying to find some common
ground between the best forecasts, it appears that the world additives market
amounts to about 7.8 million tonnes, valued at about US$16 billion and is
growing overall at about 3.5-4% per year. Fillers account for an estimated 50%
by volume but in value they make up only 15% - and here Ues the stimulus for
much current development.
Asia Pacific is the largest global user of additives, accounting for some 35% of
demand, by value. North America and Europe are about equal, at 28 and 25%,
respectively, while the rest of the world takes up the remaining 12%.
There have been dramatic changes in the additives market. The research
agency Townsend considers that the world market for performance additives
(flame retardants, stabilizers, anti-oxidants, modifiers, and lubricants) today
Additives for Plastics Handbook, edited by J. Murphy, and J Murphy, Elsevier Science & Technology, 2001. ProQuest Ebook
Central, http://ebookcentral.proquest.com/lib/bibucascb-ebooks/detail.action?docID=313546.
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14 Additives for Plastics Handbook
amounts to about 2.72 million tonnes, worth nearly US$16 billion. Flame
retardants make up 3 1 % of the volume (nearly 850 000 tonnes) and stabilizers,
modifiers, and lubricants each account for around 16-17% (about 430 000 to
460 000 tonnes).
There is some agreement, however, over flame retardants, where forecasting
agencies estimated the world market in 1996 at about 850 000 tonnes with a
value of some US$2 billion, and the Western European sector in 1995 at 316 000
tonnes.
Additives with a significant value have a smaller volume, and so the next
largest segment is probably plasticizers, which are estimated to account for 1
million tonnes in Europe alone, worth US$1.8 billion. Next are pigments and
colorants, which might account for around 2 million tonnes worldwide - but it is
unclear whether this figure includes titanium dioxide and carbon black (Rapra
estimates the European colorants market at 728 000 tonnes, worth US$1.2
billion).
Table 3.1 World production and consumption of major thermoplastics, 1999-2005

(thousand tonnes)
Production Consumpti on
1999 2005 Growth 1999 2005 Growth

rate(%) rate(%)
Polypropylene 27 870 39 924 6.17 2 7 608 40 098 6.42

PVC 26 188 31 821 3.30 25 538 32 008 3.83
Polyethylene, high density 20 889 29 160 6.71 21075 29 229 5.60
Polyethylene, low density 16 121 18 147 1.99 16538 18 304 1.70
Polystyrene 10 668 13 307 3.75 10 596 13 339 3.91

Polyethylene, linear low 12 033 18881 7.79 11 302 18829 8.88
density
ABS 3966 5227 4.71 3940 5230 4.83
Total 117735 156467 4.85 116597 157037 5.09
Source: Enichem/ParpineUi
In terms of additive type, the best estimates suggest that, in volume terms,
performance additives break down as: 69% modifiers (including plasticizers),
23% polymer extenders, and 8% process additives. In sales value, modifiers
represent 51%, polymer extenders 41%, and processing aids 8%.
By polymer matrix, PVC compounds account for 73% of additives by volume.
Polyolefins make up 10% and styrenics 5%, while the other polymers make up
the remaining 12%. In value terms, PVC drops to 59%, while polyolefins rise to
17%. Styrenics account for 7% and other polymers increase their share to 17%.
This sharp difference in volume and value is a key factor in the technical
development in the industry, where the trend is to upgrade performance,
introducing new technology and, where possible, to simplify use of presentation
with the development of multi-functional additives in a safe, more convenient
form.
The World Market 15
3.2 The Market for Masterbatch
An important market for additives is in masterbatch - concentrated

formulations that offer the processor a convenient means of handling additives,
particularly pigments, by 'diluting' with natural material beside or actually in
the processing machine. They also offer advantages in inventory size and raw
materials storage space.
The international compounding group Ampacet estimates that worldwide
consumption of masterbatch will reach 2.15 million tonnes in 2 0 0 1 . This is a
somewhat higher estimate than that given by market researchers Applied
Market Information, probably due to different product classifications. Both,
however, agree that the mature markets in North America, Europe, and Japan
are currently consuming about 76% of the world total, and Ampacet forecasts
that this share will fall to 73% in 2 0 0 1 , as demand rises in Southeast Asia and
Latin America. Film (blown and cast), blow moulding, and injection moulding
make up about 70% of consumption.
About 56% of the total polymer consumption in masterbatch is polyolefins,
estimates Ampacet, with polyethylenes making up 41.14 million tonnes and
polypropylenes 24 million tonnes.
Ampacet identifies the main world market trends in masterbatch as: (i) more
customers are expanding worldwide; (ii) masterbatch growth is slowing in North
America and Europe; and a two-tier industry will continue to evolve.
3.3 Overall Commercial Trends

The number of small suppliers is decreasing. Recent years have seen companies
building and exchanging their portfolios and global giants emerging, such as
Ciba Specialty Chemicals (US$5.5 billion turnover), Clariant (US$5.23 biUion),
W R Grace (US$3.7 billion), Morton (US$3.33 billion), and Great Lakes (US$2.5
billion).
Looking at the pattern of recent takeovers and share exchanges (see table
blow), three clear trends can be identified:
• Globalization. Following the key end-users (especially in automobiles,

electronics, medicals, and packaging) as they set up manufacturing
worldwide, to be able to deliver exactly the same formulation, anywhere.
This has been a feature of many recent mergers and partnerships, and also
of new investment (such as in carbon black, by Columbian).
• Redefinition of core business and identification of key sectors, to
concentrate on new technology and product development. Great Lakes has
identified flame retardants as a core sector and is now looking to improve
its position in stabilizers; DuPont, Millennium, and KerrMcgee have
decided to stay in titanium dioxide, purchasing the assets of ICI and Bayer;
and Elf Atochem has identified hydrogen peroxides as a core business.
A global position in phosphates (partly as a source for flame retardants)
was also the aim of the mergers and takeovers involving FMC, Solutia,
and Rhodia.
• Cost of new product development. Driven by competitive pressures, patent
expirations, environmental regulations, and the opportunities presented
by the growth of metallocene-catalyzed polyolefins and engineering resins,
companies appear to be adopting a ^horizontal' approach (to concentrate
on specific industries, meeting specific regulatory requirements) as well
as the Vertical' approach (concentrating on specific materials and
chemistries).
All in all, the additives business in recent years has emerged as a major global
segment of value-added speciality chemistry.
3.4 Growth of Specialist Compounders
A significant trend in the industry is the emergence of a number of companies,

usually compounders, which have identified specific product areas. A typical
specialist producer is AlphaGary (itself recently taken over), which identified
medical compounds as one of its key business sectors. The company claims to be
the leading North American and European supplier of performance compounds,
specializing in compounds for disposable medical components, as well as
closures and seals, and data transmission cables. A comprehensive range of
engineering plastics for medical applications has been developed by the US
specialist Boedeker Plastics. Aimed particularly at equipment components and
housings, it ranges from polystyrene and ABS to polycarbonate and
polysulphones, meeting USP and FDA requirements.

Another specialist in high-specification moulding compounds is RTF, which
has commercialized a series of speciality compounds based on alloys of
polycarbonate and poly(methyl methacrylate), offering greater impact strength
than polycarbonate alone while maintaining the ease of processing associated
with acrylics (including food-contact grades). Coded RTF 1800A Series, it
incorporates selected additives such as flame retardants, EMI shielding,
permanent anti-static protection, anti-wear additives, and colouring.
3.5 Regional Factors
The rate of growth of plastics consumption varies in different parts of the world,
and a lesson that Western producers have had to learn in recent years is that the
focus of growth is shifting away from them and towards Asia and Latin America -
and there is no evidence that the recent financial crises have done anything more
than to delay that growth. The highest rates of growth are expected in all areas of
Asia, and also in the Middle East and Africa. The world market divides roughly
into four even segments, each of about 1 8 0 0 - 2 0 0 0 tonnes (US$3.7 billion-4
billion): the USA and North America, Europe, Japan, and the Asia/Facific region.
The World Market 17
Naturally, the size of each segment is directly related to the production and
particularly the consumption of plastics. The relative growth of the Asia/Pacific
area, both as a producer and consumer of plastics, will have a significant effect on
additives, and it lies behind the number of mergers and takeovers that are
occurring in the additives sector.
This is clearly driving producers of fillers and additives to follow the polymer
producers and adopt a more 'global' outlook, by direct investment in other
regions, or by forming partnerships and alliances with local producers in other
regions. This has been a key factor behind much of the recent restructuring in
the industry.
Table 3.2 Regional production and consumption of thermoplastics, 1999-2005 (% of total)
Production Consumpt ion
1999 2005 Growth rate 1999 2005 Growth rate

(%) (%)
Western 24.35 23.09 3.57 24.18 21.26 3.22
Europe
Eastern Europe 2.54 2.57 5.03 2.21 2.27 5.52
CIS 1.58 1.75 6.64 1.58 1.53 4.58
USA 24.85 23.09 3.57 24.16 21.26 2.87
Canada 2.86 2.65 3.53 2.16 2.00 3.76
Latin America 5.69 6.61 7.48 7.08 7.52 6.18
Middle East 3.79 5.36 11.48 1.98 2.24 7.31
Africa 1.16 1.37 7.96 2.41 2.46 5.44
Japan 8.44 6.82 1.19 7.12 6.62 3.81
Eastern Asia'' 16.84 19.25 7.21 18.69 22.52 7.46
Asia/Pacific'' 7.90 9.48 8.08 7.77 10.17 9.90
Total 100 100 4.85 100 100 5.09
'' China, Hong Kong, Korea, and Taiwan.

^Australia, Bangladesh, India, Indonesia, Malaysia, and New Zealand.
Source: Enichem/Parpinelli
Table 3.3 Recent mergers and takeovers in the additives sector, 1997-2000^
Date Purchaser Product/division Seller
January 1997 Joint venture Additives Clariant (Sandoz)/Hoechst

January 1997 Hoechst Organic pigments Cookson
January 1997 DSM Melamine Flame retardants DSM/DSM Chemie Linz
March 1997 Ciba Speciality Additives Merger Ciba/Sandoz
June 1997 Clariant Red phosphorus Albright and Wilson
June 1997 ICI Speciality chemicals Unilever
November 1997 Great Lakes Anzon Flame retardants Cookson
December 1997 Millennium Titanium dioxide R-P Thann et Mulhouse
February 1998 Ciba 100% Allied Colloids
April 1998 Merger Carbon black/plastics Degussa/Hiils
March 1998 Kerr-McGee Titanium dioxide Bayer
March 1998 Elementis Rheox Rheological additives NL Industries
October 1998 Columbian Carbon black Copebras SA
Date Purchaser Product/division Seller
November 1998 Akzo 50% share in Akcros Elementis

July 1998 Ciba/Witco Heat Witco/Ciba
stabilizers/epoxies
July 1998 Millennium Titanium dioxide Titanio do Brazil
July 1998 Elf Atochem Hydrogen peroxide Air Liquide 50% share
November 1998 Cabot Aventis aerogels Hoechst
March 1999 Columbian Carbon black Korea Kumho Petro
March 1999 Rohm and Haas Additives 100% Morton
April 1999 Imetal Calcium carbonate 100% ECC
May 1999 Huntsman Titanium dioxide ICI Tioxide
May 1999 Rhodia Flame retardants 100% Albright and Wilson
June 1999 Great Lakes Flame retardants FMC Corp
June 1999 Merger Phosphorus FMC/Solutia
chemicals
June 1999 Ampacet Concentrates Equistar
July 1999 Merger Additives, polymers Crompton +
Knowles/Witco
November 1999 Joint venture Speciality peroxides Akzo/Coin Chem, Taiwan
December 1999 Rohm PVC processing aids Degussa/Bayer
March 2()()() Velsicol Sodium benzoate DCV Inc
March 2()()() Albemarle Flame retardants Ferro
" This is not necessarily a comprehensive list.

Source: Additives for Polymers

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CHAPTER 3

The World Market

3.1 World Consumption of Additives

While the volume of additives worldwide increased by 6% from 1996 to 1998,

Table 3.1 World production and consumption of major thermoplastics, 1999-2005

1999 2005 Growth 1999 2005 Growth

Polypropylene 27 870 39 924 6.17 2 7 608 40 098 6.42

Polystyrene 10 668 13 307 3.75 10 596 13 339 3.91

3.2 The Market for Masterbatch

An important market for additives is in masterbatch - concentrated

3.3 Overall Commercial Trends

• Globalization. Following the key end-users (especially in automobiles,

3.4 Growth of Specialist Compounders

A significant trend in the industry is the emergence of a number of companies,

polysulphones, meeting USP and FDA requirements.

3.5 Regional Factors

Table 3.2 Regional production and consumption of thermoplastics, 1999-2005 (% of total)

Production Consumpt ion

1999 2005 Growth rate 1999 2005 Growth rate

Total 100 100 4.85 100 100 5.09

'' China, Hong Kong, Korea, and Taiwan.

Date Purchaser Product/division Seller

January 1997 Joint venture Additives Clariant (Sandoz)/Hoechst

Date Purchaser Product/division Seller

November 1998 Akzo 50% share in Akcros Elementis

" This is not necessarily a comprehensive list.

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