Update on the global TPU markets

The versatility of TPUs continues to drive investment in their development and commercialisation around the world. The growth of the Asian market and cheaper manufacturing costs has resulted in many Western companies increasing their presence in the Asian continent, especially mainland China. The IAL analysts expect this trend to continue in the future, with more footwear and engineering operations moving to lower labour costs countries such as Thailand and Vietnam. The major use of elastomeric fibres in all types of clothing, footwear, and especially in the area of sportswear, means that TPU applications will move more into higher value-added areas.

There is an increasing global interest in bio TPUs. In 2009 Spanish company Merquinsa launched Pearlthane Eco, a plant derived and recyclable TPU made from renewable carbon resources and successfully marketed worldwide. The company serves all major TPU markets, but its main activity is in the adhesives market (principally used in the footwear industry), where it claims to hold over 45 % of the global market for TPU primers. Accounting for nearly 20 % of global market share, Bayer Material Science (BMS) is the leading producer of thermoplastics polyurethanes and technical films made from TPU.

Following the EU REACH regulations and the WEEE Directive, recyclability is becoming the key within the plastics industry. Across all markets many of the TPE applications have been developed through conversion from traditional rubber materials. This is because TPEs offer improved recyclability and they often present more options in terms of parts integration, manufacturing cost reduction, colour and design differentiation. This has a particular impact on the automotive and electronic sectors.

On the consumption side, TPUs represent a relatively mature market and continue to face strong competition from other thermoplastic elastomers, especially TPOs in film and sheet use. The main advantage that other thermoplastic elastomers have over TPU is their more competitive price. Therefore TPUs are often used in special applications where they outperform any other material.

In Asia-Pacific, demand is dominated by the sports and leisure segments, reflecting the extent to which production for sporting goods (i.e. soles for soccer shoes) and leisure wear has almost entirely moved to this region. It is estimated that volume growth is approximately 8 % per year in Asia-Pacific, significantly higher than the 1.7 % growth rates anticipated in the Americas and 2.4 % in EMEA.

China's market is growing at almost 10 % per year because it still delivers several TPU grades to customers across the Asia-Pacific region, whereas other emerging markets, such as Malaysia and Vietnam, are enhancing their domestic production. In Europe, the Russian automotive industry is emerging as one of the most competitive and dynamic in the world. Government initiatives and incentives are filliping the industry and attracting the foreign players, with new opportunities for TPU. On the other hand, the decline of the automotive sector during the recession in both Eastern and Western Europe has put more pressure on those governments that have tried to help their automakers as the economic crisis continues to hurt the region's motor industry.

The global demand for TPU is expected to increase by 5.9% annually until 2015; however growth forecasts for the global TPU vary considerably depending on the region. Projected growth for the EMEA markets is placed at about 2.5 % per annum over the period 2010-2015 whereas in the Americas this is seen at around 1.9 % pa. Nevertheless South American economies remain buoyant, especially Brazil, where consumer demand is growing fast and much hope rests upon the Football World Cup in 2014 and the Olympic Games in Rio de Janeiro in 2016. In both of these regions a further contraction of the footwear sector is foreseen, while the automotive sector is expected to grow steadily.

As a result of some Asian economies benefiting from the transfer of manufacturing operations from more mature economies, growth in the Asian TPU market is placed at 8.2% pa, due to the booming housing market and the largest footwear industry in the world. PVC, rubber and metal replacement are continuing to boost the market and this is expected to continue in the future.

Overall demand has been driven by the partial recovery in the automotive and insulation material industries. After three quarters of growth in 2010, the outlook for 2011 is one of stabilisation. We should see further growth this year but not as much as in 2010, when a knock-on effect occurred after the global economic down-turn.

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