North American phenolic resin demand is forecast to increase nearly 3 percent annually to 4.4...

North American phenolic resin demand is forecast to increase nearly 3 percent annually to 4.4 billion pounds in the year 2002, valued at US$3 billion, basically tracking real growth in the aggregate North American economy. Phenolic resin demand will remain closely linked to the construction

industry, which is the primary consumer of a number of products based on phenolics, including wood panels, insulation and laminates. A projected decline in US housing starts will negatively impact the phenolics market, since wood panels based on phenolics are used primarily in exterior applications for new homes. 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.

Rising housing starts in both Canada and Mexico, however, will partially offset the effects of the weaker outlook for phenolics in the US. Nonetheless, potential demand for phenolics in the Mexican construction industry is mitigated by the fact that wood-frame construction methods are not commonly used compared to adobe-style or concrete. Although new construction and the number of housing starts will slow, the North American phenolic resin industry will benefit from solid gains in remodeling and renovation activity, particularly in the residential segment.

Wood panels will remain the largest application for phenolic resins, accounting for two-thirds of total demand in the year 2002. In wood panels, phenolics are used as binding agents, where they compete primarily with urea-formaldehyde and melamine resins. The wood panel industry is gradually undergoing a shift from softwood plywood to oriented strand board (OSB) and particleboard due to cost and environmental factors. This shift from softwood plywood to OSB and other wood panels is benefiting demand for phenolic because these newer boards rely more heavily on the adhesive to provide the panel's strength, which means that phenolic loadings are higher.

Among other adhesive and bonding applications, phenolic-based laminates will benefit from rising demand related to residential repair and improvement projects, as well as solid production levels for electronic equipment. The inherent flame resistant nature of phenolic resins is continuing to boost the use of foamed phenolic insulation in various markets, including motor vehicles.

Phenolic Resins in North America (published 6/98, 234 pages) is available for $3300 from The Freedonia Group, Inc., 767 Beta Drive, Cleveland, Ohio 44143-2326. For further details, please contact Corinne Gangloff by phone (440) 684-9600, fax (440) 646-0484 or e-mail at pr@freedoniagroup.com. Full text is also available online through commercial database companies and the www.freedoniagroup.com Web site.

If information in this release is used in an article, please attribute information from this news release to The Freedonia Group, Inc. (Cleveland, OH) and include, if possible, the price of the report. We would also appreciate (at your convenience) a copy of the article or publication in which we appear.