Polyurethane business facing challenges

The global polyurethane business is growing at a rate that exceeds the GDP rate, which makes new investment an imperative. However higher prices for raw materials and energy, including a 500% increase in the cost of natural gas in comparison to last year, have shrunk margins and made it difficult to justify capital investment at present.

This was the message, in part, delivered by Bayer Corporation’s president — polyurethanes for NAFTA, Larry Stern, in a recent telephone press conference.

Stern noted that while the same economic conditions prevail for manufacturers of other polymers, the production of urethanes is a more capital intensive process in comparison to other resins.

Demand for the three chemical components of polyurethane, diphenylmethane-4,4-diisocyanate (MDI), toluene diisocyanate (TDI) and polyol has been growing in the range of 4.5 to 8% annually over the past number of years, says Stern, which in turn has taken its toll on capacity.

“MDI capacity will be sold out in 2002-2003, so we need to bring some new capacity on line,” says Stern. Lead time to build a polyurethane production facility is on the order of three years, he notes.

“We don’t want critical shortages for our customers,” Stern says. “We have a number of fantastic applications coming down the pipe, for example a polyurethane truck box for GM that takes more than 50 lb. of weight out of the vehicle.”

Stern expects about 10,000 of the truck boxes to be built this year.