REPORT HIGHLIGHTS

• Performance fluorine chemicals and polymers are a large business in the United States. This is not surprising since they are virtually ubiquitous in our environment and infrastructure. This business also continues to grow, with total estimated sales in our base year of 2000 of more than $5.4 billion, consuming almost 1.9 billion pounds of chemical and polymeric materials. This market has grown from 1995, when BCC last reported on the subject; at that time the overall market was about 1.5 billion pounds valued at $3.75 billion in 1995 dollars.
• Organic fluorochemicals, both aliphatic and aromatic have been dominated for years by aliphatic compounds, first chlorofluorocarbons (CFCs), and now that CFCs are banned for most uses in the United States, by their replacement chemicals, hydrochlorofluorocarbons (HCFCs) and hydrofluoro-carbons (HFCs). These replacements have taken over the primary refrigerants market nicely, and are trying to replace CFCs in other important uses such as plastic-foam blowing. BCC predicts that organics will grow from 827 million pounds, valued at about $2.1 billion in 2000 to a billion pounds valued at about $2.5 billion in 2005.

REPORT SCOPE

INTRODUCTION

STUDY GOALS AND OBJECTIVES

Fluorine compounds are all around us and we use them every day, despite the fact that most people do not know them as such, or at least did not know them until the end of the last century. This is when controversies arose over chlorofluorocarbons (CFCs) and the ozone layer, and over water fluoridation. Fluorine itself is chemically a bit curious. It is the most reactive halogen, yet its most well known compounds such as CFCs and fluoropolymers (nonstick frying pans, etc.) are best known and used because they are stable and inert.

BCC defines "performance" fluorine compounds as those that do a specific job, based on their physical and/or chemical properties, which other products and materials do not do as well. Criteria for "performance" are based more on function than price, but price also is a component of acceptance. By our definition and discrimination, most compounds excluded from the study are low-priced, large-volume commodity inorganic fluorides.

Our goal is to describe compounds and markets for performance fluorine compounds in three basic families: inorganic fluorochemicals, organic fluorochemicals and fluoropolymers. Because of the great diversity and breadth of these products and markets, no study can cover, or even attempt to cover, the entire fluorine chemical world. Many applications are quite small in volume, yet have fairly large dollar sales because they command high prices. Others are rather high-volume and could be considered commodities; however, they really do fill a performance function such as, for example, hydrogen fluoride (HF) as a petroleum alkylation catalyst. The compounds and applications that we cover are discussed below in the Scope and Format section.

REASONS FOR DOING THE STUDY

Performance fluorine chemicals are important materials of commerce, and today have both commercial and political significance. Most of us drink fluorinated water and brush our teeth with fluorinated toothpaste. We drive air-conditioned cars fueled by high-octane unleaded gasoline produced with the assistance of hydrogen fluoride (HF) catalyst. We use Teflon®-coated frying pans and wear Gore-Tex® and other brand name, weather-resistant outdoor clothing.

Other applications for performance fluorine chemicals are not as well known to the average person, but are no less important. This is because they affect chemical and electrical/electronics manufacture, packaging and a number of other important commercial and consumer es and markets. This is increasingly important in semiconductor manufacture.

This study is an update of a similar report by the same author published in 1995, and covers not only the fluorochemicals and polymers industry in general, but also some significant changes that have occurred in the intervening period. BCC performs these studies to provide a comprehensive and timely reference for those interested and/or involved in these products; this is a wide and varied group of chemical and other companies. They make and supply performance fluorine chemicals and polymers, process technology and equipment designers and marketers, politicians of all stripes, and the general public. To compile this report, we have sorted through and condensed information from a large amount of literature, reference materials and other sources.

CONTRIBUTION OF THE STUDY AND FOR WHOM

This report is intended to assist those involved in several different segments of the U.S. industrial and commercial sectors. These organizations and people include those who are involved in the development, formulation, manufacture, sale and use of performance fluorine chemicals and polymers. Included are process and product development experts, process and product designers, purchasing agents, construction and operating personnel, market staff and top management. BCC feels that this report will be of great value to technical and personnel in the following areas, among others:

• marketing and management personnel in companies that produce, market and sell performance fluorine chemicals
• companies involved in the design and construction of plants to manufacture performance fluorine chemicals
• financial institutions that supply money for these facilities
• personnel in end-user companies and industries, such as chemical processing, packaging and electronics
• personnel in government, primarily at the federal level but also state and local environmental and other regulators who must implement and enforce the laws regarding water and air quality, etc.

SCOPE AND FORMAT

This study covers many of the most important technological, economic, political and environmental considerations in the U.S. performance fluorine chemicals industry. It primarily is a study of U.S. markets, but because of the global nature of chemistry it touches on some noteworthy international activities. These primarily are the ones that can have an impact on the U.S. market such as imports/exports and foreign firms that operate here.

Market analyses and forecasts are presented for base year 2000 and a 5-year forward forecast to 2005. Market tables are presented in both volumes (in millions of pounds) and market values, based on estimated and/or average bulk prices at the manufacturer's level. These are in constant 2000 dollars. Market volumes and values are, for the most part, rounded to the nearest million pounds or dollars. For some small-volume products we break out the volumes to the nearest tenth of a million pounds; however, this does not indicate that we believe these numbers are that precise.

All growth rates are compounded and presented as average annual growth rate or AAGR. Because of rounding these small numbers, some AAGRs may not agree exactly with figures in the market tables, and the 2005 projection for some values may not agree exactly with the volume numbers, since we have tried to make the values reflect some of these fractional millions.

This report in segmented into 10 sections, of which this is the first.

The summary encapsulates our findings and conclusions, and includes a table summarizing major markets. It is the place where a busy executive can read the major findings of this study in summary format.

Next is an overview of fluorochemicals and fluoropolymers, with subsections devoted to the three main types or classes of these products: organic fluorochemicals, inorganic fluorochemicals and fluoropolymers and fluoroelastomers. The most important subclasses of each are introduced and described, e.g., aliphatic and aromatic fluorine compounds.

The next section is the first of two devoted to market analyses and forecasts. It discusses and forecasts markets for performance fluorine chemicals by product type and class. Again, these are segmented into the three large groupings of organic chemicals, inorganic chemicals, and polymers. We start the subsection for each of these three major product types/classes with a market analysis and forecast for the major types of performance fluorochemicals and polymers in each class. This is done for base year 2000 and forecast year 2005. Then, in each subsection we introduce and describe important applications.

Discussions of and forecasts for the markets by applications are featured in the next section. We have categorized applications into nine specific groups, plus one catchall "other" classification for some uses that do not fall easily into one of the other nine. These groups are:

• water fluoridation chemicals: relatively large-volume silicofluorides and inorganic fluorides.
• dentistry: inorganic fluorides used in toothpastes.
• nonelectrical equipment: end uses covered here are based on the physical, rather than chemical, characteristics of fluorochemicals; these lead to uses in industrial equipment and machinery manufacture and as cleaning agents, functional fluids, and in finished polymer parts such as piping.
• electrical and electronics (E/E) manufacture: mostly found in the increasingly important of microelectronics and semiconductors. Principal uses include cleaning and preparing E/E equipment for further processing.
• electrical equipment: a segment dominated by two large end uses, fluoropolymer wire/cable sheathing and switchgear dielectrics.
• chemical processing: all applications that serve the chemical processing industry (CPI) in its chemical sense. This means applications that stress chemical rather than physical properties, since physical applications such as chemical piping and valves are covered in nonelectrical equipment.
• refrigeration: a market group served by only one type of fluorochemicals, the CFCs and their newer replacements.
• coatings and surface treatments for both inside and outside surfaces: we include here applications that may not end up on an outside surface, such as making insulation foam for architectural walls.
• packaging and other consumer applications: these include fluorochemical replacements for CFCs such as blowing agents for consumer products (e.g., appliance insulation and flexible foams for cushions, etc.), plus diverse other end uses such as sports clothes and some medical packaging.
• other applications: these range from fire fighting to Teflon® tapes

The next section is devoted to fluorochemical technologies. It includes discussions of the chemistry and physico-chemical properties of fluorochemicals, synthesis or fluorochemicals, and some new technologies.

Public policy and other public issues are discussed in the next section, primarily CFCs and their replacements and their effect on the ozone layer, the greenhouse effect, and the seemingly never-ending controversy over water fluoridation.

A discussion of the industry and market structure of the U.S. performance fluorochemical/polymers industry is next, with emphasis on the major domestic producers and suppliers. We also note several important foreign-owned supplier companies that operate in the United States. Imports and exports, product prices and pricing methods, distribution and technical service also are discussed.

Our last narrative section contains profiles of companies that BCC considers to be among the most important or visible in these es. There are many more companies that operate in one or more niche markets, but we try to list those we deem important enough to be considered major producers and suppliers.

The appendix contains a glossary of some important terms, abbreviations, acronyms, etc. used in the fluorochemical and polymer industries.

Outside the scope of this study are compounds we do not consider "performance." We make no attempt to cover the entire field of fluorine chemistry. It simply is too large. Literally thousands of compounds, most of them organic, are used in the chemical synthesis involved in making pharmaceutical and agricultural chemicals. These compounds, especially the many intermediates, are impossible to categorize and characterize except for the fact that they contain fluorine.

Thus, we restrict the scope of this study to those performance fluorine compounds and classes of compounds for which definite markets have been established, whose suppliers are known, and which meet our performance criteria. Only single-entry moieties are considered here; that is, mixtures and compounded resins are excluded to avoid double counting of the same chemical or resin in virgin stock and in the finished product.

Since many such compounds are monomers or other starting materials as well as intermediates, there always is the possibility of double counting and subsequent overstatement. Captive use further complicates the analysis. For example, a significant percentage of PTFE resin made is used captively. Finished fluorine-containing pharmaceutical and agricultural products are beyond our scope since they are huge dollar markets by themselves.

We define performance as signifying the product has properties that make it unique for its performance and applications. Such chemicals, which normally command high prices and are made in relatively small volumes, also are usually grouped with specialty chemicals and products (as opposed to commodities). This delineation holds fairly well for all products and applications in this report except for three: hydrogen fluoride, some CFCs and their replacements, and water fluoridation chemicals.

These three groups are made in large quantities and thus, could be considered to be commodity in nature. We include them because they do perform specialty functions that other chemicals do not do as well; thus, they truly are performance chemicals. CFC replacements also are more costly then true commodities.

Because of the versatility of these compounds, many products and companies appear more than once in this report. To reduce repetition, in our section on markets by product type/class we present overall market tables for each class of fluoro product (organics, inorganics, and polymers); each table then is segmented by major product type or application. Then we introduce the most important applications for each type or class.

In the section on markets by applications we forecast markets in each of the major applications groups and other applications, cited above. For each of these groups, we break the forecasts down into the type of fluorochemical or polymer, and in many cases further break down the forecast to individual compounds, compound classes, or application (see below for more on the difficulties in classifying these materials).

Even with this separation, some products and applications are discussed in more than one place. This treatment may seem repetitious in many cases, but we feel it is important to cite key information at the point where it is appropriate and pertinent. Many readers will turn to particular sections of the report for specific information, and we want that information to be there for them. Thus, any apparent repetition is a deliberate action to place information where it will be the most helpful. By covering all the bases in this manner we attempt to show all the different uses and interactions, and also, by this means, again show the versatility of fluorine chemicals and polymers.

This report is an overview of the entire field of performance fluorine chemistry and its products, and as such, is not as detailed as some specialty reports that focus in greater detail on one specific group of fluorine chemicals or polymers. BCC has several such reports, some of which are noted below.

CLASSIFICATION OF FLUOROCHEMICALS

Definition and classification of fluorochemicals into our three basic categories is relatively straightforward, with the caveats noted below regarding compounds such as liquid low-molecular weight polymers. These could be placed in either the organics or polymers segments. Our classifications also follow usual customs and chemical nomenclature. Conventional nomenclature is employed, i.e., we use ordinary chemical names and conventional notation for compounds and polymers. We assume the reader has at least some elementary knowledge of chemistry. The glossary in the appendix also defines some important terms. In cases where trade and public custom prevail, we also use commonly accepted terms.

Because there often are complicated and long chemical names for many compounds covered in this study, they frequently are referred to by acronyms. We do the same and the common acronyms are both explained at the outset and defined in the glossary. Thus, fluoropolymers usually are referred to by their familiar acronyms (e.g., PTFE, FEP, etc., all in upper case letters). Trade names are designated by ® or ™ symbols, such as Teflon® for DuPont's brand of fluoropolymers. Generic names are in lowercase script.

By the same token, we use industry parlance in discussing CFCs. CFC refers to the now-banned chlorofluorocarbons, those compounds that contain only chlorine and fluorine in addition to carbon. HCFC denotes the first class of replacement chemicals, the hydrochlorofluorocarbons, with hydrogen in addition to chlorine and fluorine. Finally, HFC denotes hydrofluorocarbons, the preferred compounds that contain no chlorine and therefore, allegedly do not damage the ozone layer.

Finally, a note regarding how we segmented and classified performance fluorine chemicals and their markets. Many such compounds often are listed either by their chemical classification (such as fluoroaromatic compound), by application (such as chemical intermediate), or both. This makes it difficult to place fluorochemicals and polymers into neat boxes in tables or charts. We had to make some arbitrary decisions regarding where to list and discuss many of the most important products.

Our conventions are:

• Organic fluorochemicals are restricted to individual compounds and discrete moieties such as fluorobenzene. Any product that is a polymer of any sort, even low molecular weight polymers that are liquids, is grouped with other fluoropolymers. We further break organics down into aliphatics and aromatics.
• Inorganic compounds are simpler to group. We include all boron trifluoride derivatives with inorganics. Even though a large part of the BF₃ market consists of organic complexes, the active chemical still is inorganic. However, even with this simpler grouping, there still are some compounds classified either by name/type or application. Examples of the former are silicon tetrafluoride (SiF₄) and the fluoborates; the latter includes fluorides used in water fluoridation and toothpaste.
• Fluoropolymers as a group consist of polymer resins (PTFE and its cousins), elastomers of several types, and low molecular weight (MW) polymers. These find many uses ranging from surfactants to textile finishing. Many low MW polymers are liquids and some find use as chemical intermediates. However, since they are polymeric in nature we include them with other polymers.

There also are many fluorosilicon compounds and products. All of these are introduced and discussed in their proper context. Thus, water fluoridation chemicals and SiF₄ are inorganics, and fluorosilicon fluids and elastomers are polymers.

METHODOLOGY AND INFORMATION SOURCES

Extensive searches were made of the literature and the Internet. This included many leading trade publications, and well as technical compendia, government publications, and information from trade and other associations. Much product and market information was obtained from principals involved in the industry. Other sources included textbooks, directories, articles and Internet sites.

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