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2017.02.02
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[Parts & Materials] Prospects for Korea’s Engineering Plastics Industry

Like metal and ceramic, plastic has become an indispensable part of people’s lives. Because it is lightweight and can be easily molded, it is suitable for producing parts in mass quantities. For this reason, plastic is widely used in high-tech industries, including electric appliances, transportation equipment, aerospace, 3D printing and household goods. In general, plastics can be classified into three kinds—commodity plastics, engineering plastics and super engineering plastics—based on their continuous use temperature. Polyethylene and polypropylene (continuous use temperature: below 100°C) belong to general-purpose plastics. On the other hand, materials such as polycarbonate (continuous use temperature: between 100°C to 150°C) are classified as engineering plastics. Those that can endure above 150°C are classified as super engineering plastics. General-purpose plastics and engineering plastics, widely used in household goods, are usually produced and consumed in large quantities, which bring in large-scale investment. Special-purpose engineering plastics and super engineering plastics, however, are limited in their application and are used for industries like aerospace. Thus, the type of plastic is produced in small quantities with multiple production lines and sold at relatively high prices.

Globally, the engineering and super engineering plastic material market is expected to grow at a compound annual growth rate (CAGR) of 3.5 percent from 8.86 million tons (KRW 44 trillion) in 2014 to 10.8 million tons (KRW 53 trillion) in 2020. General-purpose plastics such as polycarbonate, polyamide and polyoxymethylene occupy 93.5 percent of the total market share, while the remaining 6.5 percent is taken up by super engineering plastics. This means that most engineering plastics are used for general purposes, whereas super engineering plastics are limited for special purposes. When it comes to industry growth rate, the general-purpose engineering plastic sector is expected to grow 3.5 percent and the super engineering plastic industry 4.1 percent annually.

Korea is a chemical industry powerhouse which boasts a production scale of approximately USD 177 billion as of 2013. This is the fifth largest production scale in the world, close to that of other advanced countries like Japan and Germany. Korea’s chemical industry is also well-structured both upstream and downstream. Since the 1970s when the government started fostering the heavy and chemical industry, Korea developed both the upstream petrochemical industry that produces ethylene from crude oil as well as downstream industries based on the technologies of the upstream industry. The plastic industry takes up approximately 17 percent of the total petrochemical industry based on shipment value. Most of the shipment is for general-purpose plastic. However, engineering plastic is increasingly taking up a bigger share. For instance, the proportion of nylon and polyethylene terephthalate (PET) increased in the 1990s, as well as polycarbonate and polyimide film in the 2000s. Recently, the demand for light and eco-friendly materials is increasing. Electric/electronic devices such as wearable devices are quickly being developed and the era of eco-friendly vehicles is well on its way. This is the reason why engineering plastic is becoming a new growth engine in many advanced countries. A brief summary of the growth engines of the engineering plastics industries is as follows.

Lightweight

Lightweight cars are being developed to match the international community’s efforts to cut greenhouse gas emissions and to meet stricter regulations regarding fuel efficiency. For example, reducing the weight of a 1.5-ton vehicle by just 10 percent can lead to 3.8 percent higher fuel efficiency, 4.5 percent less carbon dioxide emissions and 1.7 times greater durability of the car body. In addition, Korea, the United States and the EU have already announced that they would impose stricter regulations regarding fuel efficiency. As a result, automobile companies around the world are investing a large amount in the research of making car materials lighters. Under such circumstances, engineering plastic is quickly becoming more valuable. Super engineering plastic has strong enough heat resistance to replace metal materials. Also, since the weight is less than half that of metal, it is one of the most suitable materials for lightweight automobiles.

Eco-friendliness

People often think that plastic, as a petrochemical product, is not eco-friendly, regardless of its actual effects to the environment. Therefore, it is necessary to make engineering plastics more eco-friendly so that it can be continuously used in the industry. Eco-friendliness can be achieved in three ways. First, it can be achieved by introducing an eco-friendly manufacturing process, such as volatile organic compounds (VOC) to reducing toxic substances. The second way is to utilize more bioplastics, which are made from eco-friendly raw materials such as biomass. Third, it can be achieved through bio degradable plastic that can decompose in a natural way. For the most part, eco-friendly engineering plastic materials can be used for household goods, transport equipment and electrical and electronic industries.

Functionalization

What if plastics can radiate heat or have a metal-like luster? Such questions are closely related to the functionalization of engineering plastics, which creates added value in finished goods. Functionalization is especially important for wearable devices such as mobile phones. Given that Korea is a powerhouse for wearable appliances, the functionalization of engineering plastics will greatly impact the development of other relevant fields. In the future, the engineering plastic industry will continue to grow not only in Korea but also in the world if it can make engineering plastic lighter, more environmentally friendly and highly functional.

Future prospects

Research and investment

From a technological standpoint, it is very important to continuously develop engineering plastic materials. Close industry-academia cooperation is the pre-requisite to achieving this goal. First, universities should develop basic technologies and nurture human resources specializing in engineering plastics. Second, national and public research institutes should develop optimized material properties and fusion technologies. Lastly, companies should conduct business and economic feasibility tests in order to select technologies to commercialize for the global market. These technologies developed by industry-academia cooperation can be applied in various ways.

As previously mentioned, the foundation of Korea’s engineering plastic industry is relatively weak. However, we can make a breakthrough by actively attracting foreign capital. In attracting foreign capital, there are two important factors, which are location-related incentives and manpower. The first factor includes access to industrial sites and tax incentives, while the second factor of manpower is comprised of bright talents who can help effectively operate production facilities. In this regard, despite Korea’s lack of capital, advanced basic technologies and manpower can go a long way securing foreign capital. Japan’s Toray and Germany’s BASF establishing polyphenylene sulfide and polyether sulfone factories in Korea is an example of direct investment.

Changing trade environment

Korea has officially entered the FTA with China as of December 2015. In this agreement, Korea’s degree of openness in the materials industry is higher than that of China. Considering that many global chemical companies are already operating in China, there is concern that the Korean market might be taken up by products produced by these companies in China. Fortunately, there are still far more corporations wishing to enter the Chinese market, but difficulties in managing manpower, the unstable financial system and income disparity are serving as stumbling blocks to making investments in China.

In this regard, Korea has a competitive edge against China in terms of manpower, technological capability and national branding. By taking advantage of these strengths, Korea should make sure that the Korea-China FTA creates positive effects on attracting foreign direct investment. For example, if we succeed in bringing a global materials company to Korea, domestic engineering plastic companies can help that company enter the Chinese market. A tell-tale example of this is Japan’s Toray, which set up a factory in Gunsan, Korea.

While the Obama administration actively pursued TPP negotiations, Donald Trump has been less passionate about the agreement thus far. Because the TPP has a similar effect of signing an FTA with Japan (although technically speaking, it is a deal with Pacific Rim countries), the delayed TPP negotiations can be a good opportunity for the engineering plastic materials industry. That is because Japan is a powerhouse for plastic materials used for electronic products, and it will be difficult for Korea’s high value-added plastic industry to survive if the TPP enters into force right now. Therefore, Korea should take this period as an opportunity to develop relevant technologies.

Industrial paradigm shift

The fourth industrial revolution is all the rage, as evidenced by keywords like big data, shared economy, autonomous vehicles, Internet of Things and 3D printing. With the fourth industrial revolution, the existing industrial structure is being torn down, giving way to new industries. This revolution might focus on the software aspect of things, but physical materials are also becoming important. For example, one of the issues regarding autonomous vehicles is how to make lightweight cars. In the Internet of Things sector, sensors featuring special plastics are becoming more necessary, while engineering plastic materials are with no doubt important in 3D printing technology.

When a new industry emerges, start-ups can enjoy a variety of opportunities. As previously stated, super engineering plastics are produced in small quantities. That is why it is an optimal sector suitable for the fourth industrial revolution. The merit of super engineering plastics is that people can start a small-sized business based on high-quality technology without heavily investing in a large industrial sites. Moreover, burgeoning start-ups can be a bridgehead for foreign companies seeking to enter Korea through foreign direct investments or M&As. On this note, corporations and the government should recognize the importance of plastic materials in the era of the fourth industrial revolution, and actively pursue R&D efforts in this field.

Conclusion

Korea’s history of technology development and production in the engineering plastic field is very short compared to that of other advanced countries. However, it is estimated that the engineering plastic industry will continue to grow with increasing demand for lightweight, eco-friendly and highly-functional plastics. Therefore, Korea needs to actively promote foreign investment based on advanced technologies and skilled manpower. Despite industrial paradigm shifts, such as the changing trade environment caused by the FTA and TPP and the fourth industrial revolution, the engineering plastic industry will continue to grow together with Korea’s main industries such as automobiles and electronic/electrical devices.



Yong Seok Kim 

Ph. D., Principal Research Scientist 

Korea Research Institute of Chemical Technology (KRICT) 

yongskim@krict.re.kr




The above article does not necessarily reflect the views or position of KOTRA.

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