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Bayer still betting on PC growth in China

March 16, 2006

3 Min Read
Bayer still betting on PC growth in China

In 1999 when Bayer MaterialScience (Leverkusen, Germany) initially announced polycarbonate (PC) production in China, a two-phase plan with 50,000 tons of capacity in each stage was deemed sufficient. Soon that was changed to two 100,000-ton phases online by 2009, and most recently 2009 became 2007, as the company deals with nearly insatiable appetite for its Makrolon material in the country.

Greg Babe, Bayer MaterialScience LLC (Pittsburgh, PA) president and CEO touched on explosive growth in China at a recent pre-NPE 2006 press conference in New York, declining to say how much PC the company has exported into China to meet shortfalls, but remaining confident that its nearly $5 billion total Chinese investment will pay healthy dividends.

Babe said the virgin material, and PC-based alloys, is seeing a lot of use in the burgeoning electrical/electronic market for applications like computer housings. The company has already completed a 50,000-ton capacity compounding unit in the country for alloying PC with materials like ABS for such components.

According to petrochemical consultant Chemical Market Associates Inc.''s (CMAI; Houston, TX) 2005 Plastics Industry Update, PC demand in northeast Asia, which includes China, is projected to climb to 1.8 million tons by 2009, three times the 600,000 tons of demand in 1999. By comparison, Europe and North America are predicted to have around 600,000 tons of demand by 2009. In 2004, China represented 25% of global PC demand, followed by the U.S. (19%).

CMAI reports that global PC capacity went from 2.3 million tons in 2001 to 3.1 million tons in 2004, led by GE (30%), Bayer (25%), Teijin (10%), and Dow (8%). Significant past and future ripples in the PC market have been caused by optical discs, with a demand drop in optical media in 2001 from 20% to 8% causing a brief period of overcapacity in North America. Questions around this application loom since music and software are increasingly downloaded directly from the Internet instead of from CD''s, and the advent of memory devices like thumb drives has placed additional pressure on discs'' data-storage stronghold.

CMAI says that from 1986 to 2000, PC enjoyed 11-12% annual growth, and that in 2006 and 2007, 12% growth is still likely, but beyond that the automotive market for PC, including glazing and body panels, will have to supplant optical-disc demand, which will likely taper. Globally, optical media grew steadily from 1999 to 2005, but at that point, CMAI said it began to level off, and it predicts disc production will stay around 30 million annually through 2009.

Bayer, whose Makrolon went in the first CD in 1982 (700 MB of memory compared to 25 GB for today''s Blu-ray), has said it feels the automotive market will expand in coming years.

Speaking at the same conference, Bob Kumpf, Bayer''s North American VP for future business, pointed to his company''s current PC-for-automotive projects with Opel and smart, as well as the zaZen concept vehicle, as promising developments. Drawing an analogy to head lamps, which after switching from boxy glass structures to stylized PC parts, have become an integral part of a car''s brand, Kumpf says further application of PC in body panels and glazing could become a branding element. "We see the [automotive PC market] moving beyond weight savings, into safety and security, then to styling," Kumpf said.

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