An Updated View on the Polyurea Market

Kevin A. BuckMarketing Manager; Adhesives, Coatings & Elastomers

Huntsman

Outline

• Polyurea in 5 Minutes (or less)• A Global Overview• North American Focus

– Infrastucture– Oil & Gas

• What the Future Holds?

Polyurea in 5 minutes (or less)

Polyurea in 5 Minutes (or less)A Technology, not an Application

• Definition (source: PDA)– A pure polyurea coating / elastomer is derived from the reaction product of a 

polyisocyanate component and an amine‐terminated resin blend. For reference purposes, a polyurethane / polyurea hybrid coating / elastomer is the reaction product of a polyisocyanate component and a resin blend component. The resin blend may be made up of blends of amine‐terminated and / or hydroxyl‐terminated polymer resins. 

• Typical end‐products include:– Coatings

– Caulks

– Molded Parts

A High Performance, Fast‐Set, Reactive Material

Polyurea in 5 Minutes (or less)A Technology, not an Application

Polyurea in 5 Minutes (or less) Segments vs. Applications

Segments• Transportation• Infrastructure• Oil & Gas• Defense & Security• General Construction

Applications• Waterproofing• Blast Mitigation• Corrosion Protection• Wear Protection• Primary and Secondary 

Containment

Pure vs. Hybrid vs. PolyurethaneWhy choose one over another?

• Cost vs. Performance– Is Polyurea the correct 

choice?• What are the key performance 

parameters?• Keep an open mind

• Aromatic vs. Aliphatic– Is UV color stability 

necessary?• Can desired performance be 

achieved with a topcoat? Increasing Performance

Increasing

 Cost

AromaticPolyurethane

AliphaticPolyurea

AromaticPolyurea

SpecialtySystems

A Global Overview

A Global Overview9.1% A.G.R. since 2006

North America

Europe

APAC

ROW

2006 Volume8.7 MM Gallons

North America

Europe

APAC

ROW

2015 Volume19 MM Gallons

Source: Study of the Global Polyurea Industry; PDA 2007

Source: Markets & Markets Polyurea Coatings Market: Global Polyurea Forecast to 2020

A Global OverviewHow did the original study perform?

• Anticipated the growth of APAC– On par with North America for volume

• Material splits on par with recent studies– Pure / hybrid– Aromatic / aliphatic

• Overestimated A.G.R. a bit, but to be fair, there was:– The “Great Recession”– Raw material supply/demand imbalances– Collapse of the oil drilling market

A Global OverviewProduct Breakdown by Application Method and Type

SprayingPouring

Hand Mix

Market by Application Method

PureHybrid

Market by Product Type

A Global OverviewA few key points to ponder…..

• China– “… polyurea waterproofing coatings has been prohibited from China Railway’s official bidding 

process in high speed railway construction.”*• A result of numerous new entrants into market• Quality issues arose in numerous finished applications

• Europe– PDA Europe, along with other Trade Associations (FEICA, IVK, Europur, etc.) participating in a 

PU Exchange Panel in attempt to provide a common voice to the market• Anticipated Annex N Document in 2016, which would increase training and documentation 

requirements prior to products reaching market• Attempting to work with PU Europe (Rigid Foam Association) on process

• North America– Shipping of corrosive materials– OSHA National Emphasis Plan for isocyanates

* ‐ PU Coatings Companies Exploring New Market Opportunities in China; Coatings World; March 2016, pp 64‐5

North American PerformanceGrowth, but not as Predicted or Anticipated

• 2007 PDA Survey projected initial growth of 12.0%

• Actual annual growth rate 2007‐15 = 5.5%

• Mexico now similar size to Canada

US

MexicoCanada

2015 North America Volume6.6 MM Gallons

United States FocusWhere did we come from?

Housing Bubble

The “Great Recession”

American Recovery & 

Reinvestment Act

Rapid Increase in Demand for Polyurea and Components

Supply / Demand Imbalance

Increase in Commodity 

Raw Materials

Collapse of Oil and Gas Markets

Raw Material Capacity Increases

High Speed Rail + U.S. Infrastructure

Alternative Energy

Rise in Hydraulic Fracturing

Nominal GDP and Final Demand1980‐2014; projected 2014

Infrastructure in the United States

Infrastructure Applications Polyurea in North America

• Used for:– Waterproofing

• Bridges• Roadways• Roofing• Parking Decks

– Grouts & Caulks– Pipeline Coatings

United States InfrastructureA Wind Power Interlude…

• Why is this brought up?– Material used in construction of wind blades is also used in the resin component of polyurea

– Increase in wind power installations increases demand for raw materials

U.S. Annual and Cumulative Wind PowerCapacity Growth

Source: American Wind Energy AssociationU.S. Wind Industry Fourth Quarter 2015 Market Report

Water and Wastewater InfrastructureA Growing Issue according to AWWA

• 2015 State of the Water Industry report– Current industry health rated 4.5 / 7.0– Is expected to continue to decline over the next 5 years

– Top concern is “Renewal and Replacement of Aging Water and Wastewater Infrastructure”

– 42% of respondents have a concern over “establishing and following a financial policy for capital reinvestment”

United States Bridge InfrastructureStill work to be done (source: USDOT FHA)

Structurally Deficient10% Functionally 

Obsolete14%

Deficient23%

Satisfactory53%

Total Bridges in the United States 612,000

• Approximately 10% of bridges are deemed “Structurally Deficient”– A surface area of 25 million 

square meters• Polyurea used as a 

waterproofing membrane to protect the structure

• Potential demand of 13 MM gallons (@ 80 mils)

Public Infrastructure SpendingWeakness since 2010

Public Infrastructure SpendingOperation and Maintenance Outpace New Projects

United States Infrastructure MarketA $416 Billion Market for Public Spending

North American Oil & Gas Market

Oil & Gas Applications Polyurea in North America

• Used for:– Tank Bases– Retention Ponds– Storage Tanks and Pipelines– Secondary Containment

Oil & Gas Applications Retention Ponds

• Marcellus Shale– Polyurea sprayed over a geotextile membrane

– Typical size could be:• 300 ft x 400 ft• Hold 15,000,000 gallons of water

North America Oil & Gas MarketWhat has happened?

Exponential increases in US shale oil production and the refusal of OPEC to reduce output led to global oil supply outstripping demand beginning in early 2014.Global oversupply is forecasted to continue through 4Q 2016.

Source:  IEA Oil Market Report

North America Oil & Gas MarketMarket Reaction

Global oversupply led to a precipitous drop in oil prices over the course of 2014‐2016.  Current forecasts predict a slow recovery as supply reaches an equilibrium.  

Source:  NASDAQ – 03/08/2016

North America Oil & Gas MarketWhat is Happening to Drilling?

• Monthly number of new well permits is 33% of where it was in 2013‐2014

• New well starts are at the lowest level since at least 2006

• Number of active drilling rigs is 25% of the 2014 level 0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Jan‐13

Apr‐13

Jul‐1

3

Oct‐13

Jan‐14

Apr‐14

Jul‐1

4

Oct‐14

Jan‐15

Apr‐15

Jul‐1

5

Oct‐15

Jan‐16

Well Starts

Well Permits

Source:  RigData, a division of DataWright Corporation

Short Term Energy OutlookWest Texas Intermediate Crude to Remain Low

• Global oil inventory expected to continue to rise– 1.6 MM bpd in 2016– 0.6 MM bpd in 2017

• Uncertainty for pace of global economic growth and contribution to oil demand

Short Term Energy OutlookNatural Gas to Rise Slightly

• Warmer than normal temperatures this past winter

• Record inventory levels

• Production growth

What does the future hold?Subdued Economic Activity for 2016‐2017

• Global economic growth projected to be 3.4% in 2016 and 3.7% for 2017– Advanced economies (U.S., Japan, Euro‐area) projected to increase 0.2% to 2.1% for both 2016 and 2017

• Anticipated tightening of United States monetary policy– China expected to slow to 6.3% in 2016 and 6.0% for 2017

• Weaker growth in investment• Economic rebalancing toward consumption and services

– Latin America expected to contract in 2016• Recession in Brazil

Source:  International Monetary Fund 2016 World Economic Outlook UPDATE, January 2016

What does the future hold?The effect on Polyurea

• Potential for growth exists but may be limited in traditional applications by:– Global economic growth– Performance of the oil and gas markets– Availability of public spending on infrastructure and construction

• Maximize the ability to expand horizons to develop new applications where:– Polyurea is not the first choice, or even discussed– Takes a thorough understanding of the advantages and limitations to 

find optimal fit 

•Disclaimer•Huntsman Corporation warrants only that its products meet the specifications stated in the sales contract. Typical properties, where stated, are to beconsidered as representative of current production and should not be treated as specifications. While all the information presented in this document isbelieved to be reliable and to represent the best available data on these products, HUNTSMAN MAKES NO WARRANTY OR GUARANTEE OF ANY KIND, EXPRESSOR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, NON‐INFRINGEMENT OF ANYINTELLECTUAL PROPERTY RIGHT OF ANY THIRD PARTY, OR WARRANTIES AS TO QUALITY OR CORRESPONDENCE WITH PRIOR DESCRIPTION OR SAMPLE, ANDANY USER OF PRODUCTS DESCRIBED HEREIN SHOULD CONDUCT A SUFFICIENT INVESTIGATION TO ESTABLISH THE SUITABILITY OF ANY PRODUCT FOR ITSINTENDED USE AND ASSUMES ALL RISK AND LIABILITY WHATSOEVER RESULTING FROM THE USE OF SUCH PRODUCT, WHETHER USED SINGLY OR INCOMBINATION WITH OTHER SUBSTANCES. Products may be toxic and require special precautions in handling. For all products described herein, the usershould obtain detailed information on toxicity, together with proper shipping, handling, and storage procedures, and should comply with all applicable safetyand environmental standards. The behavior standards and/or toxicity of the products referred to in this publication in manufacturing processes and theirsuitability in any given end‐use environment are dependent upon various conditions such as chemical compatibility, temperature, and other variables, whichmay not be known to Huntsman. It is the sole responsibility of the user of such products to evaluate the manufacturing circumstances and the final productsunder actual end‐use requirements and to adequately advise and warn future purchasers and users thereof.

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Kevin_a_buck@huntsman.com