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US demand for engineering plastics is projected to grow 3.5 percent per
year to 5.4 billion pounds in 2010, a marked improvement over the five-year
period from 2000 to 2005. The turnaround will be driven by a resurgent electrical
and electronics market, the largest outlet for engineering resins, and by increasing
per vehicle usage in the large motor vehicle market. Advances will also benefit
from the continued drive to replace metal and other materials with lightweight,
cost-effective, high performance plastics. However, gains for engineering
plastics will be tempered by increasing market maturity and competition with
lower-cost commodity resins. In value terms, engineering plastics demand will
advance 3.9 percent per year through 2010 with sales exceeding $10 billion.
Value gains will be driven by strong growth in higher-cost specialty resins,
although prices for most individual resins are expected to decline from peak 2005
levels.
Polycarbonate and polyesters will offer the best growth prospects among higher-volume resins. Polycarbonate demand will be fueled by solid gains in business machine, medical product, and skylight and glazing applications; as well as the increasing use of polycarbonate in blends with other plastics. However, slowdowns in the optical media (CDs and DVDs) market will inhibit demand for polycarbonate, and increasing offshore production will limit export opportunities. Polyester resins such as engineering-grade PBT and PET will benefit from expanding applications in motor vehicles, while liquid crystal polymer demand will be driven by a strong electronics market. The largest engineering plastic by volume, ABS, is expected to grow at a much slower rate. ABS demand will suffer from competition from polypropylene in low-end applications and other engineering resins in more demanding markets. Polyacetal will also experience below-average gains due to market maturity in many key industrial and automotive applications.
On the whole, demand for smaller-volume engineering resins will advance
at a substantially faster pace than their large-volume counterparts. Polyphenylene
sulfide, polyimides and polysulfones will lead gains, driven by increasing use in
high-temperature applications such as electrical connectors and under-the-hood
motor vehicle parts. Fluoropolymers will also see growing opportunities in wire
and cable coatings and industrial components. Market penetration for these resins
will primarily come at the expense of metal, ceramics and thermoset polymers.
However, the high cost of these resins -- which generally range in price from $6 to
over $30 per pound -- will limit their use to filling specialized performance needs
where their cost can be justified.
Electrical and electronic products and motor vehicles were the dominant
markets for engineering plastics in 2005, combining to account for 60 percent of
total demand. Electrical/electronic markets will see the fastest growth, driven by
increasing shipments of business machines and other electronic equipment,
although slower advances in appliances and optical media will temper gains.
Above average growth for engineering plastics is also expected in consumer
markets -- especially medical products -- and glazing and skylights in surging
nonresidential construction markets. While demand in motor vehicle markets will
advance more slowly, the use of engineering resins on a per-vehicle basis will
grow by twelve pounds through 2010.
The engineering plastics industry is highly concentrated, reflecting the
significant financial commitment required to attain competitive economies of
scale and develop proprietary technologies. GE Plastics and DuPont were the two
leading suppliers of engineering plastics in 2005, combining to account for 42
percent of the market. A strong second tier of companies -- BASF, Bayer, Ticona
(Celanese), Solvay and Dow Chemical -- collectively controlled an additional 30
percent of US demand. Engineering plastics firms have typically focused on
internal sources of growth and product development; however, acquisitions and
divestitures may be undertaken to expand a company’s geographic reach or
streamline product portfolios.
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