TPE business becoming global; growing in Asia, says report

London -- European suppliers of thermoplastic elastomers (TPEs) are growing steadily in many of their key markets, and this growth is currently highest in the regulated products sector. The market has perceptibly modified its distribution and consumer purchasing patterns due to several structural changes during 2001-2004, according to a report from market researchers Frost and Sullivan.

Some of these structural changes include US companies entering into alliances with European suppliers, Asian organisations continuing to make inroads into the European market and European suppliers entrenching themselves in Asia. For instance, ExxonMobil Chemical is building strategic alliances to promote Santoprene in China, India and Southeast Asia and Noveon has begun building a new plant to meet local demand for its thermoplastic polyurethane (TPUs) near Shanghai.

These trends have created a more global TPE market as well as multi-region business structures in leading companies. There is a shift to more regional sourcing from global suppliers and a greater role for direct sales at the expense of independent distributors.

The market is also witnessing another major trend - the replacement of alternative materials such as thermoset rubber with TPEs in key segments. However, there are still significant barriers to the complete replacement of rubber by TPE.

Rubber processors have been reluctant to invest in thermoplastic processing technology because of high switching costs and are generally unconvinced about TPE's advantages over traditional rubbers. Moreover, these processors have long-standing relationships with original equipment manufacturers (OEMs) in many traditional markets, which raises entry barriers for TPE producers in the euro 1270 million market.

The OEMs are the most influential participants in the value chain and they have the ultimate say on the material used in their products. Major shifts in material usage only tend to occur when OEMs see a major cost or marketing advantage from doing so.

"Although TPE producers are slowly overcoming the barriers to market development, they must continue to raise awareness and educate end users about the total systems cost and marketing benefits of using TPE rather than traditional rubber," says David Platt, Research Analyst with Frost & Sullivan.

The report, Strategic Review of the European Thermoplastic Elastomers Market (B572-39) was published in June 2005 and is available from F&S at a price of $3690.

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Press releasefrom Frost & Sullivan

Website of Frost & Sullivan (home page of report)