Huntsman's acquisition of the Oxid business will help the company benefit from the growing polyurethanes (PU) insulation market, an executive for the US-based isocyanates producer said on Thursday.
Huntsman announced last week that it had closed on the deal. Financial terms were not disclosed.
The acquisition will allow Huntsman to add Oxid's line of TEROL polyester polyols, which are made in a plant in Houston.
Huntsman already sells polyether polyols and methyl di-p-phenylene isocyanate (MDI), which are also used to make polyurethane foam.
Oxid's polyester polyols help increase a polyurethane's R-value, a score that rates a material's insulation properties, said Steven Burns, vice president for polyurethanes, Americas, at Huntsman.
Polyurethanes made with TEROL also have good flammability resistance, a key quality for a material used in buildings, he said.
Huntsman is keen to improve the flammability resistance and R-value of polyurethanes because insulation is the single largest application for its PU business, Burns said.
Moreover, the company expects demand to grow for PU-foam insulation, Burns said. Regulators are adopting codes that require buildings to have better performing insulation.
"The specifications now are for significantly greater insulation use," Burns said.
These stricter codes should increase demand for PU foam, because, by and large, it offers the highest R-value per inch, Burns said.
By choosing PU foam, buildings can meet the stricter insulation requirements without significantly wider walls, Burns said.
PU foam still has a relatively small market penetration among buildings, so demand should also grow if the material captures a larger share of the market, Burns said.
Energy efficiency is not limited to the US. It is a global trend, and Huntsman expects to further benefit from it with its acquisition of the Oxid business, Burns said.
Oxid sells little of its TEROL product line outside of North America, Burns said. Huntsman can use its existing customer network to sell TEROL to new markets outside of North America.
"There is a lot of potential to build on what they already have," he said. "We can take this investment we made and really reap some global benefits."
The Oxid acquisition will complement another move by Huntsman to meet growing demand for PU foam.
In March, the company announced plans to increase MDI capacity at its complex in Geismar, Louisiana. When finished in 2014, MDI capacity at Geismar should increase by 50,000 tonnes/year to 500,000 tonnes/year.
"If we are going to have a lot of polyol to sell, we also need some MDI," Burns said.