Disparities in Regional Growth Characterize the Recovery Outlook for European Synthetic Latex Polymers, According to Kline

PARSIPPANY, NJ, October 12, 2010 – Although the market for synthetic latex polymers in Europe is expected to grow at a modest CAGR of 0.9% through 2014, it continued to demonstrate a declining trend in 2009 due to significant contraction in major end-use markets. The total market was estimated at 2.5 million dry tonnes in 2009, according to latest report Synthetic Latex Polymers 2009-2010 Global Series: Business Analysis and Opportunities from worldwide consulting and research firm Kline & Company.

The impact of the recession on key end-use markets has sent the demand for synthetic latex polymers into an overall decline; however, regional response to the financial downturn has not been uniform. Whereas the effects of the crisis have been more severe among the economies of Western Europe, several new Eastern European EU member states have seen less negative impact.

The largest consumers of latex polymers in Europe are paper and paperboard applications, followed by paints and coatings. Together, they represent approximately 49% of the overall market. Highest in demand are acrylics and SB latex, constituting about 66% of sales in terms of volume.

“Among actions taken to overcome the protracted recession were capacity utilisation rate reductions and plant closures that have cut supply, while the most agile suppliers have worked to improve efficiency and economies of scale,” comments Anna Ibbotson, Industry Manager at Kline’s Chemicals & Materials practice.

Industry activities such as Dow’s acquisition of Rohm & Haas in Europe boosted Dow’s sales capacity by about 30%, mostly in the paints/acrylics line. BASF doubled its styrene butadiene production with the acquisition of CIBA, a move that not only added to BASF’s capacity, but also consolidated supply to the paper industry. This acquisition activity is expected to significantly reshape the competitive landscape in the future.

Also pertinent are environmental and safety regulations, which will become increasingly stringent. The Biocide Product Directive and low-VOC regulation promote the use of water-based formulations, and aldehyde-free and plasticizers-free latex. Regulations favor VAE-based products, since this polymer type satisfactorily meets prescribed performance and environmental criteria. Applications utilizing these polymer types, including printing inks, construction, paints, and coatings, are likely to expand faster than other end-use applications, averaging annual growth rates of around 2% over the next four years.

With much of the synthetic latex polymers end-use markets tied directly to GDP through the manufacturing and construction industries, the outlook is promising. The International Monetary Fund (IMF) predicts a 1% growth in European GDP through 2012. Therefore, demand for synthetic latex polymers is expected to recover and reach 2007 levels before 2012. Faster recovery rates are expected in the Eastern Europe region. However, the outlook for the demand for synthetic latex polymers in some end-use industries is uncertain and even negative.

For example, the European paper and paperboard industry has suffered overcapacity issues, raw material price volatility, and increased pressure from Asian competitors. “If overcapacity levels remains high and paper demand continues to decline, further capacity curtailments can be expected to take place in 2011, negatively affecting overall demand for synthetic latex polymers,” adds Sharbel Luzuriaga, Kline’s senior consultant for synthetic latex polymers European research.

Synthetic Latex Polymers 2009-2010 Global Series: Business Analysis and Opportunities provides a detailed, independent appraisal of the global market for synthetic latex polymers. The reports include current and forecast demand by major product and end-use industry, product grades and prices, applications, distribution channels, supplier sales, and technical and market trends. Manufacturing economics will also be analyzed for selected synthetic latex polymers.

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