PHENOLIC RESINS DEMAND TO REACH 4.7 BILLION POUNDS IN THE YEAR 2004.

Demand for phenolic resins in North America is forecast to increase 2.2 percent per year to 4.7 billion pounds in the year 2004, lagging real (inflation-adjusted) gains in the general economy. Gains are closely linked to the construction industry, which is the key market for a variety of products

based on phenolic resins, including wood panels, insulation and decorative laminates. As such, an expected slowdown in new building construction across the region will restrain gains in phenolic resin demand over the next five years. Nonetheless, the phenolic resin market will remain healthy due to increased demand arising from repair and remodeling building construction activity in the US, increased industrial activity in Mexico and a rebounding housing market in Canada. In addition to wood panels, decorative laminates and insulation, phenolic resins find use in industrial laminates, foundry molds, friction materials, coated and bonded abrasives and molding compounds. These and other trends are presented in Phenolic Resins in North America, a new study from The Freedonia Group, Inc., a Cleveland-based industrial market research firm.

Wood panels are the largest outlet for phenolic resins, accounting for more than half of total demand in 1999. In this application, phenolic resins can be used in the production of softwood plywood, oriented strand board and various nonstructural wood panels, such as particleboard and hardwood plywood. Although plagued by a slowing new building construction industry, particularly in the US, demand in this application will remain favorable due to ongoing shifts in the wood panel product mix favoring oriented strand board and particleboard over softwood plywood. These wood panels have more intensive adhesive requirements than plywood, thus promoting increased resin demand per square foot of board produced.

Phenolic molding compounds, including both general and engineering grades, will offer below-average opportunities due to increasing competition from alternative materials. Competing materials for phenolic molding compounds include engineering thermoplastics, such as nylon, polybutylene terephthalate and polycarbonate, as well as various metals. Nevertheless, this segment of the phenolic resin market will experience modest gains, partially due to developing applications in the motor vehicle market, such as poly-v pulleys and camshaft sprockets. Good performance at a reasonable cost has long been an important selling point for phenolic resins, especially in applications such as wood bonding and insulation, where discoloring and other drawbacks can be overlooked because of cost savings.

Phenolic Resin Demand in North America

(million pounds)

Item                                  1989        1999         2004

Phenolic Resin Demand                 3126        4190         4680
Adhesive/Bonding Applications         2890        3933         4395
Molding Compounds                      196         204          225
Other Applications                      40          53           60

Phenolic Resin Demand                 1438        2556         3229
 (mil US$)
                                      % Annual Growth
Item                                 99/89       04/99

Phenolic Resin Demand                  3.0         2.2
Adhesive/Bonding Applications          3.1         2.2
Molding Compounds                      0.4         2.0
Other Applications                     2.9         2.5

Phenolic Resin Demand                  5.9         4.8
 (mil US$)

Freedonia Group, Inc. (Cleveland, OH)

Phenolic Resins in North America (published 05/2000, 239 pages)is available for $3600 from The Freedonia Group, Inc., 767 Beta Drive, Cleveland, OH 44143-2326. For further details, please contact Corinne Gangloff by phone 440.684.9600, fax 646.0484 or e-mail pr@freedoniagroup.com. Full text is also available online through commercial database companies and the www.freedoniagroup.com Web site.

Please attribute information from this news release to The Freedonia Group (Cleveland, OH) and include, if possible, the price of the report. We would also appreciate a copy of the article or publication in which we appear.