While looking at the bigger picture is helpful, the reader has to remember that the raw materials appearing in appliances often pass through one or more intermediaries. These may turn copper into pipes, steel into coated coils, various feed stocks into plastic resin for refrigerator liners, or raw glass into pyrolytic oven door glass. Other companies are primarily involved in distribution. To give a better picture of how appliance companies are being affected, this report includes input from companies that directly supply the appliance industry.
Despite the slow global economy, several types of plastics monomers are getting more costly, while supply for some is tight. Among a number of late 2002 price increases was a 10-percent hike for caprolactam monomer, announced by DSM Chemicals North America, Inc. (Augusta, GA, U.S.). The monomer is used for the production of Nylon-6 fibers and plastics. Nylon is said to be the largest engineering plastic resin worldwide.
Over the years, plastics have increased their penetration in appliances, in part due to the development of new grades and resin technologies. In the face of a weak business machine market, Robert Findlen, vice president and director of commercial business at LNP Engineering Plastics (Exton, PA, U.S.), reports his company is focusing on new engineering plastic compounds and technologies to inspire more growth. "Because of the weakness of the market, we can't count on our customers to take the lead in developing new applications with our existing core materials," he notes.
Mr. Findlen foresees a better 2003 for business machines, and reports good availability for his company's engineering plastic compounds. "On pricing, we're keeping a close eye on raw materials costs. Benzine and other monomers are up in price, increasing resin prices we use in our compounds. Through the development of new lower cost compounds, we are balancing the higher costs against the needs of our customers to keep prices down."
Also highlighting introductions is Dow Polystyrene (Horgen, Switzerland). According to Susanne Kremeier, global marketing manager for Appliances, her company has introduced six new grades since 1999. Among these is the 1170 series for refrigeration liners. Due to a more consistent, thinner liner, customers report 3-10 percent material savings. The company produces different grades for different regions, depending on the blowing agents the liners will contact. She reports 12-15 percent of her company's business is in the appliance industry, higher than the overall industry's 5 percent.
"We've experienced good volumes, and our prices have been firm," says Ms. Kremeier. "However, our materials include benzine, ethylene, and styrene monomer, whose prices have been at high levels. Styrene monomer could stay a problem, as shown by the two U.S. plants recently experiencing difficulties. Currently, the industry is at the upper range of capacity utilization for this monomer, and no new capacity is coming on line. At the same time, we anticipate 3-4 percent annual growth in demand."
"Current demand for engineering plastics resins is at a good level, largely driven by ABS, SAN, and polypropylene (PP) compounds," observes Emmanuel Petiot, European marketing manager for Appliances at the Dow Chemical Company (Midland, MI, U.S.). "With questions around oil pricing and U.S. intervention in Iraq fueling unsteady growth forecasts from European countries, we are currently experiencing a period of uncertainty; however, we do not see any signs to suggest a fall in market demand, with the exception of PP compounds that are being replaced by neat PP."
"Global demand for engineering plastics in the appliance market continues to be strong," adds Denise Kniager, Dow's North American marketing manager for Appliances. "As our customers relocate manufacturing operations around the world to remain competitive, there will be increased opportunities for suppliers who can provide products and services to any and all customer locations, globally."
Dow does not anticipate any shortage in copolymer supply in 2003, and is investing in ABS capabilities with a new plant in the Netherlands. Regarding pricing, says Ms. Kniager, "It has rebounded in the later half of 2002 and will continue to be driven by demand and increases in feedstock costs in 2003."
Adds Dan Knost, appliance industry specialist for Advanced Elastomer Systems in Akron, OH, U.S., "We're seeing an increased reliance by appliance makers on the value-added technical services and design capabilities that some material suppliers like AES provide. And with the demand for more energy-efficient models, many appliance makers are turning to companies like AES to assist them in their design efforts to achieve new levels of performance and cost efficiencies. We're also seeing more appliance makers specifying Santoprene TPV for 'first-intent designs.' What that means is, instead of converting a part made with another material into TPV, we're finding that appliance makers are increasingly specifying Santoprene TPV for original component designs. Our TPVs offer design flexiblity that can aid in part consolidation, which reduces cost and eases assembly-line pressures."
He says, "Part of our continuing growth in the appliance industry has been due to the fact that our materials offer recyclability, design flexibility, and enhanced performance, helping appliance makers design new components to meet the energy consumption efficiency standards. The industry is also showing increasing interest in our bondable TPVs, which bond to a number of substratres and allow for the bonding of rigid/soft components, thus consolidating parts, improving cost efficiencies, and enhancing design flexibility."
Cyro Industries (Rockaway, NJ, U.S.) reports having a good year in the floor care appliance market and is optimistic about this market in 2003, especially with the recent introduction of two new acrylic compounds to the appliance industry. Says Stephen Magaziner, business manager for Modified Acrylics, "Supply of our acrylic-based multipolymers is plentiful and pricing is forecasted to remain stable."
Read the complete 2003 Materials Forecasts:
Plastics: Monomer Impact
Refrigeration Systems: Keeping Cool