Foaming at the wallet

Valued at 4.70 billion Euros in 2004, the European polymer foams market is forecast to grow at a compound annual growth rate (CAGR) of 5.2% to reach 6.71 billion Euros in 2011, according to new research from Frost and Sullivan.

Currently, the market is passing through a difficult phase and has to overcome numerous challenges that stand in the way of continued growth.

The most important challenge is the skyrocketing prices of crude oil and its derivatives. This rising trend has affected almost all manufacturers of organic chemicals, including polymer foam suppliers.

Leading suppliers such as Dow had to increase its methylene di isocyanate (MDI) and toluene di isocyanate (TDI) prices three times in 2004. Similarly, BASF - another major supplier to the polyurethane (PUR) foam industry - raised the prices of its Pluracol polyol products twice, in 2004 and early 2005.

"While suppliers can look forward to top line growth brought about by these price increases, they will also have to contend with diminishing margins as a result of spiralling energy prices," notes Frost & Sullivan Research Analyst Hariharan Ramasubramanian. "This is likely to remain a significant challenge for suppliers to the polymer foams market in the short to medium term."