"Our Arcel business has tripled in size during the last two years by delivering significant benefits to the multi-billion-pound protective foam packaging market," said Chris Pappas, senior vice president and president of Styrenics for Nova Chemicals.
"This planned expansion is part of Nova Chemicals' ongoing investment in technology and assets that deliver higher-value performance products to meet the changing needs of our customers."
Protective packaging demand in the US will grow 5.2 per cent annually through 2008, according to research analyst Freedonia Group.
In the study, entitled Protective Packaging to 2008, the firm predicts that inflatable bags, insulated shipping containers, polyolefin rolls and moulded foam will see the best rates of growth. Altogether, the protective packaging sector is already worth $2.7 billion in the US alone.
Nova believes that Arcel resin, which it claims combines the toughness of polyethylene and the processability of polystyrene to yield a uniquely resilient inter-polymer packaging material, can meet this growing demand. With the rapid increase of online sales, the value proposition for protective packaging has fundamentally changed.
"Protective foams today require higher-performing resins to reduce the risk of damage that is a reality in business-to-consumer deliveries," said Dan Nelson, vice president of global Speciality foams for Nova Chemicals.
"In addition to offering superior multiple-impact resistance and damage protection, Arcel resin delivers a lower total cost to OEMs by reducing package sizes, lowering transportation costs and improving space and cube efficiency."
The proposed increase in production capacity comes after a difficult year for the packaging industry, which witnessed a series of significant raw material cost rises. The cost of natural gas and petroleum, the starting point for the production of many types of packaging resins, have increased consistently.
Benzene, which is directly affected by oil prices, is used to make styrene. The price of benzene has now reached historically high levels - prices have been rising steadily since the start of the year, and are now double what they were six months ago.
This has had an inevitable knock-on effect on the cost of manufacturing packaging materials, and resin manufacturers have been passing these higher costs on. Nova increased the price of its styrene monomer by $0.10 per pound, the price of polystyrene resins by $0.12 per pound and the price of expandable polystyrene resins by $0.10 per pound from the middle of August 2004, in addition to all other previously announced price increases.
Arcel resin is processed today by customers in North America, South America, Europe, Asia and Australia and is available globally from Nova Chemicals and its moulding partners. Arcel resin runs on standard expandable polystyrene (EPS) moulding equipment, and Nova claims that it processes more easily than competitive materials and is recyclable in the polystyrene recycling stream.
NOVA Chemicals is a commodity chemical company that produces ethylene, polyethylene, styrene monomer and styrenic polymers, which are used in a wide range of consumer and industrial goods. The company manufactures its products at 18 operating facilities located in the United States, Canada, France, the Netherlands and the United Kingdom.