European polymer foams market to grow at EUR 6.71bn by 2011, says Frost & Sullivan

06 Sep '05

3 min read

Frost & Sullivan announces European polymer foams market is forecast to grow at a compound annual growth rate of 5.2 per cent to reach EUR 6.71 billion in 2011. Currently, the market is passing through a difficult phase and has to overcome numerous challenges that stand in the way of continued growth.

Prime among these challenges 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.

"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 (http://chemicals.frost.com) 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." Compounding this challenge is the fact that most end users, particularly those in the commodity segments of comfort and packaging applications, are extremely cost conscious and unwilling to absorb these price increases.

With many companies now relocating their manufacturing bases to eastern European countries offering cheaper labour, many polymer foam suppliers - especially those catering to specificend user markets such as expandable polystyrene (EPS) in packaging - will see a significant erosion in their customer base.

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