Chemical Profile: US polyols

USES

The major use of polyols is in polyurethane (PU) foams, flexible or rigid, which are produced by the reaction of a polyol with an isocyanate, usually toluene di-isocyanate (TDI) or methyl di-p-phenylene isocyanate (MDI).

Flexible foams are primarily used in cushioning applications such as furniture, bedding and car seats, and in carpet underlay. Rigid foam’s largest application is in the construction industry, where it is mostly used for insulation. Rigid foam is also used in commercial refrigeration and packaging. Smaller uses for polyether polyols include elastomers, adhesives and sealants, surface coatings and PU fibres.

Flexible PU foams use higher molecular weight polyols (in a range of 2,000 to 10,000), while rigid foams use lower molecular weight polyols.

PU markets are generally considered mature in North America and growing at a moderate pace. South America is considered to be a market developing more aggressively in line with growth in GDP, demographics and purchasing power.

The polyols considered in ICIS reports and assessments are polyether and polyester polyols. The key feedstocks and precursors to the polyols are propylene oxide (PO), ethylene oxide (EO), ethylene, propylene, and glycols, among others.

SUPPLY/DEMAND

Polyol production and supply in North America have been largely stable and in balance over recent years. Polyols producers in the US include BASF, COIM, Covestro, Dow Chemical, Huntsman, Shell, and Stepan. Consumption in North America has been growing at a measured pace since the recession of 2008.

A major driver for consumption is the construction industry, which has grown moderately and irregularly in recent years in line with the gradual recovery in the US. As the US economy improves, so should construction and PU consumption.

Construction sets the pace for rigid PU and polyols demand used in structural applications and for flexible PUs in used in bedding and furniture.

PUs are more expensive than other materials used in construction. However, because of better insulation and sound-proofing properties, PUs can still provide cost savings, as less PU could be used than the an alternative that may be cheaper on a cents/lb basis.

Automotive applications for both rigid and flexible PUs have been performing particularly well in recent years. The automotive sector has grown significantly in the recent past after the recession of 2008, with greater use of PUs in each automobile and with increasing number of automobiles produced. Use of PUs in a car has risen with consumers demanding a plusher ride.

PRICES

Polyols prices track feedstock costs closely. If propylene and PO costs rise, polyether polyols prices will likely increase also. Additionally, the supply-demand balance of the polyol or of its raw materials can affect polyether polyols prices.

The situation for polyester polyols is similar, as prices will depend on prices and supply of raw materials such as diethylene glycol (DEG) or adipic acid.

At the end of the second quarter of 2016, global polyols markets were gauged as stable on balanced market fundamentals, while price increase initiatives announced in the US late in the first quarter have not gained traction.

Suppliers noted no stock pressure. US polyols supply was in balance with demand, while prices of upstream PO, DEG and adipic acid were steady.

Industry participants have not indicated any polyols production issues in Europe, Asia or the US. Industry participants said that the polyether polyols market outlook is stable

TECHNOLOGY

Polyether polyols are produced by the catalysed addition of epoxides, mainly propylene oxide or ethylene oxide (EO), to an initiator having active hydrogens. The most common catalyst is potassium hydroxide. The reaction is carried out by a discontinuous batch process at raised temperatures and pressures under an inert atmosphere. After polymerisation, the catalyst is neutralised and removed by filtration. The polyol is then purified.

The choice of epoxides, initiator, reaction conditions and catalyst determines the physical properties of the polyol, which can range from low-molecular-weight polyglycols to high-molecular-weight resins.

Bayer MaterialScience’s IMPACT technology is based on a zinc hexacyanocobaltate catalyst, has lower energy needs and waste, and also allows for continuous operation.

Polyester polyols can be made of virgin raw materials by polyesterification of diacids and glycols – for example, adipic acid and butanediols. They can also be manufactured from reclaimed materials by transesterification of recycled polyethylene terephthalate (PET) or dimethylterephthalate (DMT) distillation bottoms, with glycols – for example DEG.

OUTLOOK

A mature polyols market in North America is projected to continue growing in line with the economic recovery after the recession.

Latin America polyols demand is expected to eventually grow more aggressively. However, the outlook for the region has been dampened because of the weak economy in Brazil, where GDP growth is projected to be negative in 2016. Argentina is undergoing an adjustment period in 2016 with a new political regime. Demand in Venezuela is down on political and economic uncertainty.

Because flexible polyols are needed in combination with toluene di-isocyanate (TDI) to make flexible foam, sources are perplexed that there no plans for new polyols capacity in Europe, despite BASF’s and BMS’s expansion plans for TDI. The latter’s plans include the construction of two world-scale 300,000 tonne/year TDI facilities in Europe, although the numbers include some restructuring of existing TDI capacities. Some players suggest the global supply balances for polyols will need to be fully explored in order to try compensate to some extent for the missing new polyols capacity. With the TDI expansion plans for Europe, some polyols expansion in Europe will also be necessary.

The joint venture Sadara Chemical project in Saudi Arabia between Dow Chemical and Saudi Aramco is an example of the growth potential in fast-growing regions such as the Middle East. The 26-unit chemical complex in Al Jubail, Saudi Arabia, is expected to come on line in 2015 and be fully operational by 2016. The complex will include cracking capabilities, as well as producing more than 3m tonnes/year of petrochemicals, including PU products.