U.S. Flame Retardants Market: New Growth Opportunities

Flame Retardant Market – An Overview

Flame Retardants (FRs) are substances that are incorporated within materials during their manufacture or applied after fabrication to inhibit or suppress the combustion process. The major application markets for FRs include building and construction, materials and composites, as well as printed circuit boards. In 2001, halogenated FRs (HFRs) accounted for around 30.0 percent of the global FR production, while the brominated flame-retardants (BFRs) accounted for two-thirds of that production. The rest of the market was accounted by other major categories such as organophosphorous, alumina trihydrate and antimony oxides.

FR Industry Dynamics

The FR industry is experiencing high entry barriers due to difficult and expensive testing standards. The acquisition of Great Lakes Chemical Corporation by Crompton Corporation to form the Chemtura Corporation, exemplifies the consolidating stage of this industry. The industry is expected to grow inorganically, as it is more expensive to develop and test a formulation than to acquire one.

The U.S. FR market is highly concentrated, with the top five companies accounting for more than 50.0 percent of the demand in 2003. The top suppliers in the FR industry are Dead Sea Bromine Company Ltd., Albemarle Corporation and Chemtura Corporation. The U.S. FR market consists of several chemistries of which bromine-based are the largest, followed by phosphate-based and mineral-based products. The demand for halogen-free FRs continues to grow, driven by the perception that they are more environmentally friendly than bromine-based products.

Changing Paradigm: Internal Shift witnessed within the FR Industry

The U.S. FR industry is witnessing an internal shift from the traditional HFR manufacturers to non-halogenated FR manufacturers. Numerous studies published by environmental safety organizations, and objections raised by Greenpeace have significantly contributed to this internal shift. BFRs that account for majority of the HFRs find application in a range of products from fabrics to plastics. This category of FRs is highly toxic as they pose significant risk to human health and the environment. The most tested and criticized of the BFRs are the polybrominated diphenyl ethers (PBDEs), which have proved to cause problems such as behavioral changes, adverse effects on brain development and cancer.

The market has already witnessed a slump in demand for pentabromodiphenyl ether and octobromodiphenyl ether, as they have proved to be environmentally hazardous products. According to the Restrictions on Hazardous Substances Directive (ROHS), the HFRs such as Polybrominated biphenyls (PBBs) and PBDEs will be phased out by 2006 in California. Lead, mercury, cadmium and hexavalent chromium also join this list of compounds that will be phased out. This situation is expected to lead to a ban along the entire East Coast. The move closely follows the new California regulations to ban Penta and Octa formulations, both of which have already been banned by the European Union. Great Lakes Chemical Corporation now Chemtura Corporation has been the world’s largest producer of FRs has voluntarily responded to this move by banning these chemicals by the end of 2004. The company, in 2004 had voluntarily responded to this ban by stopping the production of its two BFRs known as Penta and Octa formulations.

Factors Fueling Growth in the FR Market

Regulations and Original Equipment Manufacturer (OEM) brand images are the key factors fueling the growth of this market. Regulations drive FR revenues in the United States in most of the applications.

As government bodies demand the use of less-toxic materials, the non-halogenated FR market is expected to grow. The ban on brominated compounds is expected to increase the demand for non- brominated ones, which is a positive sign for manufacturers that produce the latter. There is a need for FRs, which are environmentally safe and are non-toxic to humans. The composite industry demands less toxicity. This shift is more pronounced in the electronic and electric equipment (EEE) markets, which heavily use plastics with significant amounts of FR compounds. With semiconductor companies producing environmentally safe products, the market for bromine-free compounds looks poised for steady growth.

OEMs that are more concerned about their brand image are avoiding possible litigation and are opting for non-brominated FRs. For instance, Hewlett-Packard development Company L.P. has announced that it is likely to phase out the BFR tetrabromobisphenol A from its external case parts on new brand products after December 31, 2006. These actions have been initiated by OEMs to avoid litigation by aggrieved customers. For instance, in 1998, an Israeli end-user filed a lawsuit against the Japanese television manufacturer Sharp Corporation, claiming that he had been poisoned by PBDEs from the Sharp television set.

Emerging Opportunities: Arrival of Environmentally-Safe FR Additives

New environmentally safe FR additives have been developed to cater to the increasing demand for non-halogenated FRs. These non-halogenated FR additives are designed to act as an effective replacement for the HFRs, which are being gradually phased out. One such company manufacturing non-halogenated additives is the Connecticut-based Manufacturing Insight LLC, which has developed a new, enhanced, non-halogenated FR additive. The company identifies itself as a materials engineering group, specializing in sourcing as well as developing advanced products and formulations in the polymer area.

"Manufacturing Insight LLC operates over a broad spectrum of industries, covering markets such as aerospace, transportation, telecommunication, nuclear facilities, infrastructure, and electronics," says Tony Camarota of Manufacturing Insight LLC. The company currently offers two products, the EFR-1FM and the EFR2, to cater to the FR industry. These additives can increase the char formation of traditional epoxy coatings or resin systems by 130.0 percent over other additives .These products make the hydrocarbons inherent in resins char better than existing intumescent systems. This results in the creation of a highly dense and adhesive insulative char layer on the substrate.

This company is poised to add value to the market by driving efficiency in coating formulations in two ways: firstly by using fewer additives, which is likely to make the resin systems retain more of their physical property; secondly, the company is expected to use the same amount of additives to increase or enhance the performance of its existing resin or coating systems. "The idea should be to develop products, which minimally alter the physical properties of systems; in other words, there must be more materials and fewer additives" comments Camarota. The company plans to sell its products to paints and coating manufacturers, thermoplastic and thermoset resins providers and to the composite industry worldwide.

Conclusion

Regulations and brand image concerns of OEM customers would act as key drivers for the non-halogenated FR market in the United States. However, the key issue in the FR industry would be to replace existing halogenated FRs with non-halogenated FRs that have similar efficacy. The usage of less toxic additive systems would be one of the ways for the FR manufacturers to address this issue.

Acknowledgements

The author would like to thank Mr. Tony Camarota, Manufacturing Insight LLC for his expert opinion and advice. He can be reached at info@mfginsight.com.