Alexium International Group (ASX:AJX, OTX QX:AXXIY) has cited an independent market analysis that estimates the global chemical flame retardant market could be worth US$10 billion in 2019.
This demonstrates the size and growth of the FR chemistry market opportunity for the company.The report cites the market was worth about US$7 billion in 2014 and is forecast to increase by an average CAGR of 5.7% per year.
Of particular interest, organophosphorus flame retardants – the category which Alexium’s proprietary Alexiflam chemistries belong to - are expected to have the highest rate of annual growth of 7.5% over the next five years.
The report by US based MarketsandMarkets details the industries, regions and types of chemistry represented across the globe and will assist Alexium in planning the prioritization of market opportunities from textiles, building materials to electronics and plastics
Market Drivers
There are several factors driving the FR market:
- The economic recovery of the past several years has led to more manufactured goods being produced that require FR treatments, particularly in the construction, textiles/apparel, and automotive and transportation markets, accordingly, the size of the flame retardant chemistry market is expected to continue increasing year on year through to at least 2019;
- In addition to this economic growth, industries are also implementing more stringent fire safety regulations, which has caused companies to look for more effective performance in their FR solutions; and
- Environmental concerns surrounding some of the chemicals currently used in FR treatments have led to growth in eco-friendly flame retardants, particularly organophosphorus solutions. Bans on brominated and halogenated chemicals will directly lead to further growth of eco-friendly chemistries due to companies needing to find new solutions for their products.
In addition, the key differentiator for Alexium’s environmentally friendly FR products is the ability to treat nylon, polyester and similar materials with an effective FR solution.
This will grow the use of such materials in areas requiring FR treatments due to their cost and performance benefits.
Size of the FR Market
The worldwide flame retardant market is projected to be worth nearly US$10 billion in 2019.
This figure includes all the industries where flame retardants are used, including building and construction, electronics, wires and cables, automotive and transportation, flooring and furnishings, and textiles, the last three being the markets that Alexium products currently service.
Those three markets are currently worth US$2.5 billion and are estimated to be worth US$3.4 billion in 2019 worldwide.
Europe and North America account for 46.7% of the world’s FR chemical consumption.
The Asian market is the largest consumer of FR chemicals, but there are yet few regulations on the types of chemicals that can be used, and as such, brominated and halogenated solutions continue to dominate the market.
Alexium is poised to enter Asia and this will accelerate as import bans are placed on any FR products that do not meet destination markets stringent FR regulations.
The textiles, flooring and furnishings, and automotive/transportation markets account for 33% of the entire end use industries for FR chemicals.
These industries are also expected to increase by over 5% year on year by 2019.
In 2014, the FR chemical market in Europe and North America for the textiles, flooring and furnishings, and automotive and transportation markets was worth US$1.04 billion, and it is expected to rise to US$1.34 billion by 2019.
In North America, the market is expected to increase from US$604 million to US$777.2 million in 2019.
In Europe, where there are stringent fire safety regulations as well as laws banning halogenated chemicals, the organophosphorus fire retardant market is expected to increase from US$312 million in 2014 to US$439 million in 2019.
The North American organophosphorus fire retardant market is likewise expecting an increase from
US$267.3 million in 2014 to US$391.3 million in 2019 however this pace may quicken as new regulations come into force.
Conclusion
The report verifies what the company has observed in the industry regarding fire safety regulations and legislation dictating those chemicals that companies are no longer allowed to use to treat their products.
It also demonstrates how large the FR market is in the industries currently being targeted and shows which industries Alexium can target as it develops more products using its environmentally friendly, patented FR solutions to meet the opportunity in those market segments.
The company added it was likely that it will approach markets in the building industry, electronics and plastic markets through joint ventures with existing suppliers in those markets.
To assist this process of expanding outside of conventional textile and transportation markets already targeted, Alexium has contracted the InnovaNet Group, LLC, a business development group based in Atlanta, Georgia, to quickly penetrate into adjacent markets.
This is expected to positively impact revenue streams in 2015.
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.
Add to My Watchlist
What is My Watchlist?
