Kline Sees Low Consumption, High Growth Potential for Synthetic Latex Polymers in Eastern Europe
As the second largest consumer of synthetic latex polymers in the world after North America, the combined states of the EU-27 consumed nearly 2.5 million dry tons of synthetic latex polymers, valued at over €6 billion, in 2011, according to Synthetic Latex Polymers Global Series: Europe Business Analysis and Opportunities, recently published by global consulting and research firm Kline & Company. While consumption of polymer dispersions in Eastern Europe, Russia, and Turkey is significantly smaller compared with the major part of EU-27, higher growth potential is forecast for these regions in Kline's detailed analysis of the Eastern European Synthetic Latex Polymers Market.
The leading synthetic latex polymer consuming applications in Europe are paper, paints and coatings, and adhesives and sealants. These respective demands are expected to grow at different rates, but generally the European synthetic latex polymers market is expected to grow modestly over the next five years.
As a consequence of regulatory and voluntary initiatives in Europe, the switch from solvent-based to water-based paints is expected to continue with already the majority of decorative paints sold in Western Europe now being water-based. This evolution is directly and positively affecting upon synthetic latex polymer demand. However, implementation within the industrial coatings sector is still lagging given that they are under stronger technical pressure to provide high performance finishes and, in many cases, only solvent-based finishes can presently meet these requirements. In Eastern Europe, the penetration rate of water-based paints varies widely from country to country, but remains low therefore affording much potential.
The generally depressed construction sector in most of Western Europe and the consequent curtailing of synthetic latex polymer needs contrasts with the positive situation in Eastern Europe, Russia, and Turkey. In 2011, all major construction markets in the Eastern region, with a few exceptions, returned to growth. Civil engineering construction work, especially in the new EU member states where the infrastructure is being upgraded, is the main market driver. The constant improvements in living standards and consequent increase in the purchasing power within Eastern Europe, Russia, and Turkey bodes well for all industries.
Carboxylated styrene butadiene is the leading synthetic latex polymer used in EU-27, followed by styrene-acrylics and pure acrylics. This contrasts with Eastern Europe, Russia, and Turkey where styrene-acrylics dominate, followed by PVAc and redispersible powders.
The European market is dominated by three international players, Dow, BASF, and Synthomer (including recently acquired Polymer Latex), which hold a combined share of approximately 55%. In Eastern Europe, Russia, and Turkey, local producers of polymer dispersions are conversely playing major roles in shaping the competitive landscape. Organik Kimya, Argon Kimya, Agakim, Akrilan, Kuban Polymer, Nord-Sintez, Voronezh Sintez Kauchuk(Sibur), Synthos and Duslo Šal'a all compete fiercely with international players in the markets where they operate. In an effort to be more competitive, large multinational companies have started the production of polymer dispersions in the East: Dow in Russia and Turkey, and Momentive in the Czech Republic are prime examples of this evolution. Dow in particular is the leading supplier in Russia aided by its production facility in Ramenskoe. This local facility with its lower transportation costs and custom fees is giving the company a significant logistical advantage.