4 Reasons for the US Resurgence in the Global TPE Industry

Global production of thermoplastic elastomers (TPEs) is expected to grow 4.1% annually through 2022 to 6.8 million metric tons, according to a new study by the Freedonia Group. About half of this growth will stem from rising output in China, the world’s largest TPE market and among the fastest growing. However, a number of TPE capacity expansions are also occurring in a less obvious place – the United States.

Among these are:

• a 4,000 metric ton expansion at Arkema’s Birdsboro, Pennsylvania facility
• a 25% increase in capacity at Covestro’s New Martinsville, West Virginia plant
• a new 7,000 metric ton manufacturing location for Dongguan Top Polymer Enterprise in Georgia
• a newly opened 10,000 metric ton plant for KRAIBURG, located in Buford, Georgia
• Mitsui Chemicals’ Advanced Composites subsidiary, which will open a 6,000 metric ton plant in Sidney, Ohio.

The fact that China’s TPE production base is expanding at a rapid pace should come as no surprise. What is remarkable is the presence of any new expansions in the US, a much slower growing market.

Why are so many TPE manufacturers expanding capacity in the US? Several key reasons are outlined below.

1. The US has a big cost advantage for energy and chemical feedstocks.

The US shale gas boom has proved a boon to the whole polymer industry, and TPE suppliers are no exception. Chemicals and downstream manufacturing is a low-margin, capital-intensive process, and the advent of relatively inexpensive energy and feedstocks has shifted the global cost advantage toward the US in recent years.

2. The US is still the second largest TPE market worldwide, one of the most intensive (by a large margin), and expanding at a healthy pace.

Although the US market for TPEs is beginning to mature—particularly in the key motor vehicle market—a number of opportunities remain. Industrial components and medical supplies are both high growth areas upon which US suppliers can focus when motor vehicle output stalls. Overall demand is expected to grow 2.9% per year, according to the Freedonia study.

3. New applications for TPEs tend to be developed in industrialized countries first.

TPE product innovation has typically first emerged in the US and Europe before being adopted by the rest of the world. One example is the medical product industry, which is among the fastest growing markets for TPEs. TPEs will mostly take over from PVC in North America and Western Europe, where concerns about phthalate plasticizers in PVC products have originated. Other advantages of TPEs in medical applications include ease of processing, low odor, recyclability, and versatility.

4. Some of the firms expanding capacity in the US are Chinese companies, part of a wave of Chinese firms entering the US market.

Two firms currently undertaking capacity expansions in the US, Polymax and Top Polymer Enterprise are Chinese. Global manufacturing entities’ presence in China has created acceptance of using Chinese materials and products. As a result, Chinese companies are opening plants in North America to serve their multinational customers in both locations.

To Learn More

For more details on TPEs, check out Global Thermoplastic Elastomers, a new study from the Freedonia Group.

About the Author

Zoe Biller is an Industry Analyst at the Freedonia Group where she develops and writes reports on the global chemicals, capital goods, and polymers & materials markets.