Market Summary for Super Absorbent Polymers (Water Gel Crystals)

Since the fourth quarter of 2009, the global supply of Super Absorbent Polymers (Water Gel Crystals) has been significantly affected by production issues related to the primary raw material, glacial acrylic acid (GAA). These ongoing challenges have tightened market supply and caused price volatility. Here is a detailed summary of the market conditions in various regions:

1. Asia-Pacific

• Market Trends: Asia is the driving force in the global petrochemical industry, influencing material production, pricing, and growth.
• Supply Issues: The supply of GAA remains tight with weekly price increases in spot markets.
• Capacity Constraints: SAP production capacity has been at 100% for over a decade, with makers oversold by 10-15% of current capacity.
• Production Challenges: Regular summer maintenance shutdowns and unexpected breakdowns exacerbate supply constraints.
• Future Expansion: SAP makers plan to expand capacity, but it will take about two years to realize significant new capacity, which must be supported by corresponding GAA production.

2. North America

• Recent Events: Several critical incidents have tightened the Water Gel Crystals supply:
  1. Water Gel Crystals imports from Asia have decreased.
  2. A US GELSAP maker faced reactor system problems, reducing output.
  3. The American Acryl plant in Baytown, TX, was damaged by fire, halting GAA production.
  4. Dow Chemical’s acrylic acid unit shutdown led to supply reductions and force majeure declarations on GAA contracts.
• Impact on SAP Production: These events have caused significant delays and potential SAP shortages by mid-2024. Full recovery depends on the restoration of GAA production capacity.
• Long-Term Outlook: Even with full capacity restoration, no new SAP capacity is expected soon, potentially leading to shortages for several years.

3. European Union

• Current Situation: The EU market is experiencing similar challenges to North America and Asia. As of early 2023, GAA and GELSAP supplies were available but began to tighten by the second quarter.
• Influence of Other Regions: Shortages in Asia and North America have led to increased demand on EU supplies from the Middle East and US customers.
• Future Prospects: The EU may face SAP shortages into 2025 unless the Euro weakens significantly against the USD. The extent and duration of the shortage remain uncertain.

4. Global Market Outlook

• Demand Growth: Global demand for SAP is growing rapidly, with actual growth rates closer to 35% annually.
• Major Brand Strategies: Large diaper producers are increasing Water Gel Crystals usage globally, exacerbating supply issues for smaller users.
• Capital Investment: Investment in petrochemicals has declined in North America and the EU, hindering significant future SAP expansion. New capacities are primarily expected in China, India, and the Middle East, but these will take time to develop.

Conclusion and Recommendations

• Current Situation: GELSAP supply is expected to remain very tight through at least 2025, with no large-scale capacity expansions imminent.
• Customer Guidance: Customers are urged to incorporate this information into their planning, stay informed through multiple sources, and maintain strong communication to navigate the ongoing challenges.
• Support Commitment: GELSAP Water Gel Crystals remains committed to supporting customers to the best of its ability despite the challenging market conditions.

For any questions or concerns, please contact GELSAP Water Gel Crystals.