Polyurethanes. Mark F. Sonnenschein

of the polyurethane industry. The market and commercial activities overlap but they are not synonymous. The overlap in how the words “marketing” and “commercial” are used reflects their conflation in meaning. Polyurethane market concepts are broader, more strategic, and more theoretical than commercial concepts. Marketing encompasses the equilibrium and nonequilibrium driving forces that make one material attractive to a consumer and unacceptable to another. They take into consideration regional preferences and regional access to feedstocks, and the underlying cultural and societal influences that make a product useful, or desirable, or possess value. They also include the advantages a particular competitor in a market may possess from all facets, including intellectual (i.e. patents).

The commercial aspects of an industrial product include those that are important to specific customers or groups of customers, such as the advantages or value a product may have versus a competitive material or a competitive company in specific cases. Probably the most prominent commercial aspect, especially for commoditized products, is price and price movement. Without doubt, thorough and confident knowledge of pricing in commerce is essential and can distinguish a profitable enterprise from one that fails. A commercial move to raise prices when there is excess capacity or failure to raise prices when there are shortages or feedstock prices are rising are common commercial failures, and the ability to shrewdly navigate price movements is the hallmark of well‐run companies.

In recent years, the polyurethane industry has been subject to significant macroeconomic forces. The overriding force has been the expansion of polyurethane feedstock manufacturing capacity globally and especially in China. In particular, this capacity growth has injected chemical production during a period of global economic growth but uncertain economics in the future. Figure 1.10 shows the extent of isocyanate overproduction. The demand/capacity ratio can have a very material impact on price expectations and influence decisions on additional capacity expansions. It is not always the case that manufacturers flee a market in response to temporary price declines resulting from overexpansion. In the past manufacturers with a strong financial base have decided to wait out the failure of financially weaker producers. The closure of these weak assets will reduce production volumes, called “tightening the market.” It is also the case that in the past manufacturers with a particularly strong financial position and a strong commitment to the market will increase production in the face of overcapacity to further drive down prices, and drive weak manufacturers into untenable production economics. The anticipated response is for weak producers to shutter poorly performing manufacturing assets or to sell their business to one of their competitors. Following these closings, production can regain a capacity/demand balance and prices can rise. This kind of “game” is not seen very often now in the chemical industry. In part this is because of the relatively small number of global manufacturers and their similar financial strengths, maturity, and experience. Additionally, regulation of monopolistic behavior has become more stringent, and the potential gain by this kind of predatory practice may not be worth the potential reputational risk. In that same spirit, many manufacturers see the benefit of strong and rational competition in the marketplace. Rational and mature competition can provide ballast to minimize market fluctuations and provide a stimulus to improve business performance. Lastly, it has recently been dramatically demonstrated that temporary occurrences, such as plant disruptions, can have significant effects on supply. From the middle of 2016 until the middle of 2018 commodity isocyanates nearly doubled in price as a confluence of planned and unplanned plant shutdowns during a time of vigorous economic growth put significant constraint on supply, allowing unaffected producers to greatly increase market share and profitability during this period. Upon resolution of these temporary issues, prices fell to historical trend levels.

FIGURE 1.10 Percentage isocyanate plant capacity utilization. The triangle denotes a published expectation for 2017 from the first edition while the circles show the actual. Predictions of future economic activity should always be viewed skeptically. MDI is methylene bisphenyl diisocyanates and its oligomers.

      Trends in polyurethane manufacturing reflect global competitive pressures and global opportunities. This has resulted in expansion of manufacturing assets close to raw material feedstocks and also close to geographies with increasing economic growth. For example, during 2017–2019 there were polyurethane feedstock expansions in Saudi Arabia and the US Gulf Coast (areas of high petrochemical resources) as well as in China and Europe (areas with lower petrochemical resources). It is not immediately clear whether it is cheaper to ship commodity feedstocks to centers of economic activity or ship finished polyurethane chemicals from low‐cost manufacturing sites. However, low feedstock cost manufacturing is probably less prone to political factors and will always maintain a low‐cost position. On the other hand, market and commercial flexibility is enhanced by proximity to customers.

There is continuing movement towards manufacturing innovation using processes that reduce usage of solvents and reagents and involve less purification and environmental impact. There is probably little incentive for production of new families of polyurethane building blocks, particularly for new polyisocyanates. It would appear that the regulatory burden of new isocyanate production inhibits innovation, and currently available products perform adequately and at acceptable cost. Innovation has rather focused on the development of gas‐phase phosgenation processes that reduce solvent and energy consumption. While the large majority of polyols are produced by conventional KOH catalysis there has been moderately increasing production of polyols derived from new double‐metal cyanide (DMC) catalysts. While DMC catalysis offers significantly improved production economics, it has been limited to primary utility making slab foam polyols and has been excluded from molded foaming operations because of performance issues (see Chapter 2). On the other hand, improvements in established products, such as production of copolymer polyols with ever higher solids content, lower viscosity, smaller particle size, and improved production operations, will undoubtedly continue and find success in the market. There has been increasing attention paid toward circular economy issues related to polyurethanes, particularly as components of large visible items such as mattresses. There has been progress in processing these materials back to useable feedstocks (see Chapter 14); however, the economics of polyurethane recycle collection and conversion of finished product back to useable polyols is still questionable. Meaningful progress in the circular economy of polyurethanes may await organized municipal collection and rational recovery processes to handle the waste. Lastly, there is a growing initiative in the development of polyurethane structures hybridized with backbones that would normally be thermodynamically immiscible. The goal in this development is to obtain desirable properties of polymer backbones while minimizing any negative attributes that may evolve from thermodynamic incompatibility (see Chapter 13).

      The trend for polyurethane applications is being driven by overriding trends in the industries in which polyurethanes find purpose. Thus, automotive trends toward lighter weight dictate a trend toward higher performance at lower foam density. Higher performance includes achieving required comfort factors with lower vibration and noise transmission. In construction markets the trend is toward improved thermal insulation with new blowing agents that exhibit lower ozone depletion potential, and now lower global warming potential as well. Restrictions on acceptable flame‐retardant packages for both flexible foams and rigid foams are also a driver of polyurethane industrial innovation. Thus, blowing agents and flame retardants score highly in the intensity of industrial activity associated with polyurethanes. Industrially, reactive catalyst innovation has been consistently pursued (to reduce fugitive catalyst emissions). This trend may intensify in the future as a result of governmental and consumer pressures, particularly in Europe. The trend toward the use of renewable feedstocks has been slow and, based on patent activity, will probably remain so for the near future.

      The science of polyurethanes is ongoing and will continue a high level of activity in