Flame Retardants are chemicals added to many products to meet regulatory standards for a product's ability to resist catching on fire. However, mounting evidence demonstrates that many of these chemicals are not effective at preventing fires. Furthermore, recent studies suggest that human health risks associated with flame retardants may outweigh their benefits. Many companies are facing shutdowns due to difficulties in meeting national policy standards in terms of environmental protection, leading to a sharp drop in the supply side. Besides, the halogen-free replacement in Europe has brought about a batch of new halogen-free flame retardants, which has increased the tension between supply and demand in the industry.
Increased Demand for Flame Retardants
Flame retardants are an industry developed to meet the needs of social safety in production and life, prevent fires, and protect people's lives and properties. The demand for flame retardants continues to grow rapidly and has now become the second largest additive after plasticizers.
At present, the global flame retardants market is growing steadily, with the fastest growth in Asia. Although the history of flame retardants can be traced back to 1820, flame retardants have gradually been mass-produced and used since the 1960s. After half a century of development, the current market consumption is very large.
In 2012, the global flame retardants consumption was about 1.97 million tons. In 2018, the global flame retardants market reached 3.05 million tons, and it is expected to maintain a growth rate of more than 5% in the future.
Flame retardants are mainly divided into organic halogen series, organic phosphorus series, and inorganic series. The performance of organic halogen and organic phosphorus flame retardants is better than inorganic flame retardants. The three types of flame retardants have different chemical compositions and different flame retardants mechanisms, which also leads to greater differences in their performance. Inorganic flame retardants are physically flame-retardant, with low flame-retardant efficiency and a large amount of addition, which will have a certain impact on the performance of the material. However, due to the low cost of inorganic flame retardants, they are still the most used type. Compared with inorganic flame retardants, organic halogen flame retardants have higher flame-retardant efficiency, with good compatibility with polymer materials, which are widely used in various materials. With the strengthening of the awareness of safety and environmental protection in recent years, the safety issues of organic halogen flame retardants have gradually been realized by people, and the use of some halogen flame retardants has been banned.
From the perspective of regional distribution, the United States, Europe, Japan and other parts of Asia are the four most important flame retardants consumer markets in the world. As the birthplace of flame retardants in the United States and Europe, the industry developed earlier, while the flame retardants industry in Asia started late, but it has become the largest consumer market. The flame retardants market in Europe and the United States is dominated by aluminum hydroxide, phosphorus flame retardants and brominated flame retardants, while China is dominated by brominated flame retardants.
Tighter Regulations and Enlarged Supply Gap
With the increase in the use of downstream rubber and plastic materials and increased safety awareness, the country's requirements for flame retardant performance have become stricter, and environmental protection has become stricter. Part of Shandong's small production capacity was shut down and exited, and industry supply and demand continued to be tight. 30% of global production capacity has been cut, and the industry supply side has shrunk significantly. The production barriers of polyurethane flame retardants are extremely high, in which it takes 2-3 years from the preliminary design to passing the environmental and safety evaluations. Moreover, downstream customers also have a long certification period, thus, it is difficult for the supply side to expand significantly in the short term.
Downstream Demand Picks Up, TCPP Prices Continue to Rise
With the improvement of environmental protection and safety requirements, small production capacity is gradually cleared out, but in the face of the overall global demand for flame retardants steadily increasing by 5%, the supply of flame retardants is difficult to meet the actual demand. As overseas production and business activities are gradually restored, downstream polyether and other demand pick up. Since TCPP exports increased by 10% year-on-year in July and downstream manufacturers began to stock up, the TCPP price has soared to a heady height, from 1,429 dollars a ton to 2,000 dollars a ton, in which some manufacturers are quoting more than 2,286 dollars a ton. In the future, the supply side will continue to shrink and the situation of tight supply and demand is likely to intensify.
The Acceleration of Halogen-Free Substitution Is Good for the Development of Phosphorus Flame Retardants
It continues to promote halogen-free substitution in the European and American. The European Union has issued new electronic display eco-design regulations, which will prohibit the use of halogenated flame retardants in all electronic display screens, monitors and TV chassis and bases from March 1, 2021. Due to the low efficiency of inorganic flame retardant, it is mainly used in low-end products. Organic halogen-based flame retardants have potential safety hazards. Many halogen-based flame retardants have been banned. From the perspective of resource endowment, the global shortage of bromine resources and the increase in bromine prices have led to the loss of cost advantages of brominated flame retardants. China's phosphate rock production accounts for 46% of the world's total, and the supply of raw materials is sufficient, which is good for the development of phosphorus flame retardants.
80% of the world's flame retardants production capacity comes from China, and now many domestic companies have been shut down, reducing the global production capacity by 30%, which will have a greater impact on the market structure and the industry structure will be further concentrated.
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