Bouncing back

European thermoplastic elastomers (TPEs) companies are growing steadily in many of their key markets, and this growth is currently highest in the regulated products sector. The market has perceptibly modified its distribution and consumer purchasing patterns due to several structural changes during 2001-2004.

Some of these structural changes include US companies entering into alliances with European suppliers, Asian organisations continuing to make inroads into the European market and European suppliers entrenching themselves in Asia. For instance, ExxonMobil Chemical is building strategic alliances to promote Santoprene in China, India and Southeast Asia and Noveon has begun building a new plant to meet local demand for its thermoplastic polyurethane (TPUs) near Shanghai.

These trends have created a more global TPE market as well as multi-region business structures in leading companies. There is a shift to more regional sourcing from global suppliers and a greater role for direct sales at the expense of independent distributors.

The market is also witnessing another major trend, namely the replacement of alternative materials such as thermoset rubber with TPEs in key segments. However, there are still significant barriers to the complete replacement of rubber by TPE.

Rubber processors have been reluctant to invest in thermoplastic processing technology because of high switching costs and are generally unconvinced about TPE's advantages over traditional rubbers. Moreover, these processors have long-standing relationships with original equipment manufacturers (OEMs) in many traditional markets, which raises entry barriers for TPE producers in the €1.27 billion market.

The OEMs are the most influential participants in the value chain and they have the ultimate say on the material used in their products. Major shifts in material usage only tend to occur when OEMs see a major cost or marketing advantage from doing so.

"Although TPE producers are slowly overcoming the barriers to market development, they must continue to raise awareness and educate end users about the total systems cost and marketing benefits of using TPE rather than traditional rubber," says David Platt, Research Analyst with Frost & Sullivan.

The automotive industry is the largest end user of TPEs in Europe. On the other hand, the use of thermoset rubbers such as EPDM, polychloroprene and styrene butadiene rubber (SBR) still appreciably outweighs TPE in automotive applications.

The industry has continued to replace thermoset rubber with TPE since Frost & Sullivan last researched this market in 2002, and this trend will continue in the future to help the market reach €1.74 billion in revenue in 2011. In 2001, TPE represented around 14.0 per cent of thermoset rubber (by weight) used in motor vehicles and by 2004, this had increased to 15.2 per cent.

"The advantages of TPEs over synthetic rubber such as recyclability, greater ease of processing and design flexibility are likely to ensure its continued penetration in automotive applications," notes Mr. Platt.

With the commercialisation of several new types of thermoplastic vulcanizate that have been grouped together as super-TPV's, manufacturers of higher-end thermoset rubber and thermoplastics are being challenged to retain their market shares.

This has opened up opportunities for companies manufacturing these super-TPVs in more demanding applications such as auto under-hood, appliance and industrial parts that have high temperature requirements. They can also tap niche markets including communications devices and consumer products that are used in harsh environments.

Super-TPVs such as Zeotherm offer higher heat resistance than conventional TPVs and co-polyesters. It has a sustained heat resistance of 150 degrees C and a short-term heat resistance of up to 175 degrees C.

To withstand such temperatures, manufacturers have to incorporate a heat shield with other materials used in under-hood applications. The lack of any need for this shield is a major advantage of super-TPVs as this helps in reducing the total cost of the product.