Resins – Suppliers Key Trends and Issues

JCT Coatingstech Magazine

July 2007

Volume 4, No. 7

Market Update

Page 36-44

Excerpts from… “Resins Roundtable: Suppliers Share Their Thoughts on Key Trends and Issues”

By Cynthia Challener, JCT Coatingstech Contributing Writer

Key trends for resin manufacturers in 2007 include supply and demand and innovation. Forces that come to bear on the paint and coatings sector also, of course, directly influence the resins market. The slow down in the U.S. housing market, continued regulatory pressures around the globe, and tight availability for some raw materials are the leading issues this year. Innovation in resin technology will be necessary for success in the future.

Overall, 2006 was a good year for the U.S. paint and coatings industry, which experienced volume growth of 2.2% and value growth of 8.4% over2005, according to The ChemQuest Group. “The above historical average growth was accompanied with a return of gross margins to near normal levels, as raw material prices stabilized somewhat and producers were able to pass on earlier price increases and improve production efficiency,” notes company president and CEO, Dan Murad. Resin manufacturers benefited from these positive conditions.

The strong growth is not expected to be maintained in 2007, however, due to weakened economic conditions and a slowing in the housing and transportation sectors. The continued movement of wood, furniture, and metal manufacturing operations offshore will further impact the OEM sector. The rate of value growth for special purpose coatings will also decrease as few price increases are passed on. These changes will be felt by resin producers as well.

Regulation of volatile organic compounds (VOCs) will not abate in the future, and the switch to “greener” coatings formulations will require resin manufacturers to develop new technologies that provide improved performance. Shortages of some raw materials may have a significant affect on the resin market as well. Tightness in methanol could affect vinyl acetate monomer, for example, where capacities are already running at 96%, according to Murad. Acrylic resins, too, which experienced shortages in 2004/2005, are again fairly balanced in terms of supply and demand, but that balance could be tipped quickly if demand increases.

(To read the complete article…and more comments on Resins Roundtable: Suppliers Share Their Thoughts on Key Trends and Issues………see JCT Coatingstech Magazine – July 2007 issue...Market Update)