Abstract
Maintaining Margins in the Face of Rising Raw Material Prices a Key Challenge
Rapidly rising prices of crude oil and its derivatives have had a huge impact on manufacturers of organic chemicals and those in the polymer foams market are no exception. Leading suppliers to this market such as BASF and Dow were forced to revise their product prices several times in quick succession in 2004 and early 2005. While BASF increased the prices of its Pluracol polyol products for the urethane slab foam market, Dow raised the prices of its methylene di isocyanate (MDI) and toluene di isocyanate (TDI) products. Although this is likely to boost top line growth for polymer foam suppliers, increasing energy prices also imply that they will face dwindling margins. Most end users, particularly those in the commodity segments of comfort and packaging applications, are highly price sensitive. They key challenge for companies, therefore, is to pass on these price increases to customers while ensuring that they are not tempted to consider more attractive alternatives.
This Frost & Sullivan research service is a valuable resource for suppliers to the polymer foams market in Europe. It helps in identifying potential issues such as the impact of environmental and regulatory trends on the market. It also identifies major opportunities and suggests strategies to help companies retain their competitive edge in an increasingly difficult market environment.
Continuous Product Development expected to Drive Polymer Foams Market
"Research and development (R&D) is likely to be the major driving force for polymer foams to break new ground in high-end applications," remarks the analyst of this research service. The polymer foam industry has always been closely monitored by environmental agencies, particularly for its use of blowing agents. Through sustained R&D, polymer foam manufacturers have been able to identify more environmental-friendly blowing agents and other additives in accordance with current regulations. These companies are also focusing on improving the performance characteristics of their products. For instance, manufacturers of expandable polystyrene (EPS) have undertaken extensive R&D to increase the lambda levels in their products as well as the purity of their polymers.
Among other developments on the R&D front, companies are researching new materials that can be foamed for use in certain niche applications. For example, they are investigating the foaming of fluoropolymers and engineering plastics such as polysulphones. These specialised polymers have great potential in aerospace applications that have stringent fire retardancy requirements.
Steady Growth Projected
"Valued at EUR 4.7 billion in 2004, the European polymer foam market is forecast to grow at a healthy compound annual growth rate (CAGR) of 5.2 percent to reach EUR 6.7 billion in 2011," says the analyst. "Polyurethane (PUR) foam is expected to contribute to the bulk of revenues and volume during the forecast period." Total revenue growth will be driven initially by price increases, although volume increases are also likely to contribute significantly later.
The building and construction segment is expected to perform exceptionally well with projected revenues of EUR 3.0 billion in 2011. This is primarily due to increasingly strict energy regulations in most European countries, leading to considerable volume increases in this segment. The automotive and aerospace end-user segment also shows significant promise for greater usage of foams in the future due to the need for weight reduction and stricter regulations on passenger safety. This segment is expected to see equal increases in volume and price, contributing to strong growth in revenues. | 
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