Highlights of Study
For several decades LFT compounds have been in high demand for a variety of end use applications as they offer highly effective materials substitution in forming finished and semifinished parts. Today, these pellet, concentrate and direct in-line compounds represent very attractive market opportunities in automotive and non-automotive applications. The LFT global growth rate is 12% annually for 2006-2011, which is at least 3 times the worldwide rate of GDP growth. By 2011, at today’s average LFT selling prices, over $400 million in new revenues will be created in the global LFT market. In 2006, over 180,000 tonnes of LFT materials valued at over $500 million were consumed across all regions. Pellets, concentrates and in-line compounding share in the future growth, but not equally. Polypropylene remains the dominant resin used for LFT, and automotive continues to account for the majority of the end use applications.
Among several important market trends and findings in LFT uncovered in the course of the global research are the following:
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The use of LFT materials, which initially was driven from Europe, has now spread to all regions of the world. China represents a particularly large growth potential and is expected to surpass Japan by 2011. In Europe and North America, both pellet and in-line processing are extensively used, whereas, in Asia, pellet processing is currently the technology of choice. Growth of direct in-line processing in Asia will depend on the increased experience of Asian engineers with this technology, the expansion of higher volume European and North American automotive platforms to Asia, and the general development of the Chinese automotive industry.
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LFT market growth is largely driven by the desire of automotive producers to reduce weight and thus lower fuel consumption. One way to achieve this is to switch from metals to plastics raw materials such as LFT. Using LFT to replace metal allows suppliers to integrate parts, thus greatly reducing assembly costs in such parts as front end modules, instrument panels, and door modules. In non-automotive applications, however, this desire to reduce weight is not so evident in that many of these parts are small. In addition, most LFT suppliers’ resources are tied up in the time-consuming and more attractive automotive applications.
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Five of twelve application areas will account for nearly half the volume increase globally in LFT over the next five years. These five applications include front end modules, instrument panels, door modules, and underbody shields in automotive and general/ industrial goods within the non-automotive sector.
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The LFT market is shifting from a seller “push” to a buyer “pull” situation. LFT is no longer an emerging technology, but neither is it mature. It is showing some elements of commoditization, however. Automotive end users, as well as Tier 1 suppliers are well aware of the benefits of LFT.
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Low cost producers will win most of the volume growth. This is inevitable with production overcapacity, high growth rates, automotive volume influence and savvy negotiations by buyers with knowledge of the benefits of LFT. Niche suppliers will seek margins in product differentiation.
Study Background
The rapidly changing dynamics of the global LFT market require participants in the plastic supply chain to have an up-to-date and in-depth understanding of the evolving LFT market trends, conditions, and developments in order to effectively focus their ongoing business strategies in this area. Therefore, Townsend has conducted its third major study of the LFT industry in order to help our clients benefit from the opportunities presented by these changes and manage their business for greatest success.
Some of the key issues, drivers, and trends that are presented in this study are:
• What impact is automotive having on the global LFT market?
• What is the development rate of emerging LFT applications for non-PP resins?
• Which molders will capture the growth in this rapidly changing market?
• What are the volumes of LFT in the automotive and non-automotive segments and in the various applications? Which ones are growing the fastest and why?
• Will PP pellets remain the predominant LFT resin form?
• How do the growth in pellets, concentrates, and in-line processing (D-LFT) size up?
• What is the production capacity situation with pellet suppliers? What are the prospects for a supply/demand balance?
• What is the current state, opportunity, and future growth for LFT in the emerging regions of China, Brazil, Korea, etc.?
• What are the implications of commoditization of the LFT-PP segment?
• Who are the major global pellet suppliers and how do their strategies compare with one another?
• Who are the major global pellet molders and direct in-line compounders and what are their prospects?
Scope
The study is global and is organized into the following five regions:
1. Europe
2. North America
3. Japan
4. China
5. Rest of World
The product focus of the work is on the following materials:
• Polypropylene
• Polyamides
• Other thermoplastics
• Glass, aramid, carbon, nickel coated graphite, natural and stainless steel fibers Glass mat thermoplastics (GMT) are excluded.
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