Thermoplastic polyureathane elastomer

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N

DAN PHILIP FERNANDES

L 20368579 (LAMAR UNIVERSITY)

5/4/2015

2015

FEASIBILITY OF ESTABLISHING A THERMOPLASTIC POLYUREATHANE ELASTOMER MANUFACTURING UNIT

TABLE OF CONTENTS

EXECUTIVE SUMMARY:...............................................................................................................................1

HISTORY OF THERMOPLASTIC ELASTOMERS:............................................................................................2

PRODUCTION STATISTICS (PRICE, VOLUME):.............................................................................................3

MAIN MARKET SEGMENTS AND POTENTIAL AND EXISTING CUSTOMERS:...............................................4

POTNETIAL NEW MARKETS (IDEAS) AND SIZE OF MARKETS:....................................................................5

COMPETETION:...........................................................................................................................................6

PATENT POSTION:.......................................................................................................................................6

RAW MATERIAL SUPPLY:............................................................................................................................7

Dissocyanates (Soft Segments)-:..............................................................................................................7

Aromatic Dissocyanates-:....................................................................................................................7

Aliphatic Dissocyanates-:.....................................................................................................................7

Long Chain Diols (Soft Segments)-:..........................................................................................................7

Chain Extenders:......................................................................................................................................8

SYNTHETIC ROUTES:...................................................................................................................................8

The “one shot process” -:................................................................................................................8

Prepolymer Method-:......................................................................................................................8

STRUCTURE OF THERMOPLASTIC POLYUREATHANE ELASTOMERS:..........................................................9

COMMERCIAL MEANS OF PRODUCTION AND FIVE YEAR VOLUME FORCAST:........................................10

Belt Process:..................................................................................................................................10

Reaction Extruder process with underwater pelletizer:.................................................................10

PROCESSING METHODS:...........................................................................................................................11

Injection molding:..........................................................................................................................11

Extrusion Process:..........................................................................................................................12

Blow Molding:................................................................................................................................13

Calendering:...................................................................................................................................14

KEY PROPERTIES:......................................................................................................................................15

Mechanical Properties:..........................................................................................................................15

Thermal Properties:...............................................................................................................................16

Hydrolytic Stability:................................................................................................................................17

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Oil, grease, and solvent resistance:.......................................................................................................17

Resistance to Microorganisms:..............................................................................................................18

UV resistance:........................................................................................................................................18

PRODUCT LIMIITAIONS:............................................................................................................................18

PROCESSING LIMITATIONS WITH TPU:.....................................................................................................19

ENVIROMENTAL ISSUES:...........................................................................................................................19

QUALITY CONTROL:..................................................................................................................................19

VDE Specifications-:...............................................................................................................................19

UL 94 (Underwriters Laboratories)-:......................................................................................................20

Thermomechanical Analysis (TMA)-:.....................................................................................................20

ISO -:......................................................................................................................................................20

SAFETY ASSESSMENT:...............................................................................................................................20

PROFITABILITY ESTIMATES:......................................................................................................................20

Profitability Worksheet and graphs for the proposed TPU plant:..........................................................21

OTHER MARKET RISK FACTORS:...............................................................................................................25

Sales orders on short term basis-:.........................................................................................................25

Fluctuations in the price and supply of raw materials-:.........................................................................25

Competition:..........................................................................................................................................25

Dependence on growth of various industries-:......................................................................................25

OTHER TECHNICAL RISK FACTORS:...........................................................................................................26

Static nature of TPU-:............................................................................................................................26

Environmental effects on TPU-:.............................................................................................................26

TECHNICAL SUPPORT:...............................................................................................................................26

SPIN OFF TECHNOLOGY (OTHER PRODUCTS):..........................................................................................27

RECOMMENDATIONS:..............................................................................................................................27

REFERENCES:.............................................................................................................................................28

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Feasibility of establishing a Thermoplastic Polyurethane Elastomer manufacturing unit

EXECUTIVE SUMMARY:

Before thermoplastic elastomers were discovered, there was thermoset rubber. A need was felt to develop a better type of product as a replacement for thermoset rubber. This product could help in lowering cycle times, offer lower weight, and be soft or rigid, recyclable. Furthermore, these materials consisted of thermoplastic and elastomeric properties, thus thermoplastic elastomers are easy to use in manufacturing, for example by injection molding.

There are numerous classes of the thermoplastic elastomers:

Polyurethanes (TPU) Styrenics (TPE-s) Coplyesters (COPE) Polyamides (PEBA) Polyolefin alloys (TPV) Polyolefin Blends(TPO)

Thermoplastic polyurethane elastomers were the first, homogeneous, thermoplastically processabel elastomers, and today they play an important role within the rapidly growing family of thermoplastic elastomers.

I recommend the selection of Thermoplastic polyurethane elastomer because it has the following properties like excellent abrasion and high tensile strength, excellent hydrolytic stability and low temperature stability. This has variety of applications like synthetic fibers and fabric coatings. The most important usage is in vehicle fascia and other exterior parts like bumpers. With the demand for cars and footwear increasing in the developing countries like China and India, and also in the US, there will be a huge demand for this thermoplastic elastomers in the foreseeable future.

Purchasing a proven technology (Which is energy efficient) is more economical and feasible than the development of new technology. However, the sourcing and inventory of raw materials is of utmost importance because these are the major costs in production. Market factors may vary depending on demand, thereby affecting the profitability estimates.

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HISTORY OF THERMOPLASTIC ELASTOMERS:

The development of elastic polyurethanes began as a program to find a replacement for rubber during WW2. Otto Bayer and his co-workers at I.G.Farben (now Bayer AG) at Leverkusen, Germany in 1937 did pioneering polyurethane work.

He produced early prototypes by reacting toluene diisocyante with dihydric alcohols. Their original goal was to duplicate or improve the properties of synthetic polyamide fibers. From this work one of the first crystalline polyurethane fiber, Perlon U was developed.

Subsequently, the elastomeric properties of polyurethanes were recognized by Du Pont and by ICI. By the 1940’s polyurethanes were produced on an industrial scale.

The early application of polyurethane were on a limited scale as aircraft coating during World War 2. The first so called “I-rubber” had very poor properties.

To overcome these deficiencies, which were supposed to stem from an irregular elastomeric network, a polyurethane elastomer was synthesized that consisted of linear polyesters and 2-nitro-4,4’-diisocyanato-biphenyl.Later discovery was made that chain extension by short-chain diols proved to be the breakthrough for polyurethane elastomers, which were trade named Vulkollan by Bayer. In the United States, Chemigum SL was an early Vulkollan- type polyester urethane elastomer that was developed by Seeger for the Goodyear Tire and Rubber Company. Du Pont marketed Adiprene.

With the advent of these superior thermoplastic polyurethane elastomers, new applications for them were made available due to their improved properties from their predecessors. In 1969, Bayer exhibited an all plastic car in Dusseldorf, Germany. Parts of this car like the fascia and body panels were manufactured by using TPU by the process of RIM (Reaction Injection Molding).

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PRODUCTION STATISTICS (PRICE, VOLUME):

Out of the global production of polyurethane, thermoplastic polyurethane polymers account for less than 5% of the production. But in the recent years they are growing at a faster rate due to their high versatility.

Thermoplastic polyurethane market demand has already matured in the Western countries. However, there is a strong demand and growth for them in the Asian region. In fact, the Asian countries lead in the production of thermoplastic polyurethanes with 249,250 tons produced in 2012. This accounts for 58% of world production of 428,360 tons. China is the World’s leading producer and consumer of TPU. However, the demand for TPU remains limited in the Middle East and Africa.

Demand for thermoplastic polyurethane elastomers in the next five years.

The current cost for TPU from Chinese manufactures range from USD 850-3100 per ton (FOB) for TPU resin.

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MAIN MARKET SEGMENTS AND POTENTIAL AND EXISTING CUSTOMERS:

Global thermoplastic polyurethane films market is expected to register significant growth on account of increasing application in automotive industry. After-sales/replacement has been a major segment for TPU demand in automotive application.

Growth of major end-use industries such as building & construction and transportation, mainly in Asia Pacific is expected to yield growth opportunities for the market over the forecast period. Growing preference for TPU films in medical devices is expected to complement the market growth over the forecast period (2012-2020).

Market sector applications for thermoplastic polyurethane elastomers

The most important dominant applications for TPU are footwear and engineering which account for 133,015 tons and 111,730 tons of TPU demand, respectively and together account for 60% of the market.

Growth forecasts indicate that global TPU production will increase by 5% CAGR till 2019. Asia will see the largest increase of 7% growth per annum followed by the Americas which could see the growth of 2.6%.

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POTNETIAL NEW MARKETS (IDEAS) AND SIZE OF MARKETS:

The global consumption of PU elastomers were 74% thermosets and 26% thermoplastics in 2012.The following pie chart shows the world consumption of PU elastomers. :

Pie chart of world consumption of thermoplastic polyurethane elastomers-2012

In 2012, Chinese consumption accounted for 37% of the global total, up from 26% in 2005. The next largest markets were Western Europe with 17% and the United States with15.5% of the global consumption. Western European consumption is split between TPU’s and microcellular PU elastomers (primarily for footwear at 28% each.); in the United States the largest percentage is for cast elastomers at 57%.

The growth in the consumption of polyurethane elastomers in China will average 5.9% per year through 2017, growth in the United States will average 2.7% per year and the growth in Western Europe will average 2.0% per year.

During the forecasts period, China will continue to be the largest global producer of footwear and largest consumer of PU elastomers for this sector.

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COMPETETION:

80% of the global TPU market is controlled by the top five players:

Bayer material science AG (Germany) BASF SE (Germany) Huntsman Corporation (U.S.) Lubrizol Corporation (U.S.) Wanhua Chemical Group Ltd. (China)

In addition there is a competition from small domestic manufactures.

BASF SE (Germany) increased its business potential in the Western Europe with the addition of capacity, starting new R&D center and developing a new site in Asia-Pacific. It was also involved in several new product launches and exhibition of its products being used in various end–user applications. Wanhua Chemical Group Co. (China) Ltd was equally focused in capacity expansions and new products launches in order to stay competitive in the market.

One sign of Thermoplastic polymer elastomer (TPE) is the growth intramaterials competition. Some low priced TPE’s like Thermoplastic Olefins and Thermoplastic Vulcanizates (TPV’s) are challenging higher priced materials like TPU as properties have increased and the designers have learned how to use such grades more effectively.

Even in the applications like glazing seals and skins TPU’s have been targeted by O-TPE’s (Olefin Thermoplastic Polymer Elastomer) and HSBC’s (Hydrogenated Styrene Block Copolymers)

PATENT POSTION:

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Related Bayer US patents are TPU- Urea Elastomers, U.S. Patent 5,739,250 assigned to Bayer AG, April 14, 1998 and RIM elastomers based on prepolymers of cycloaliphatic dissocyantes, U.S.Patent 5,738,253 assigned to Bayer Corp. April 14, 1998.

RAW MATERIAL SUPPLY:

Thermoplastic polyurethanes are generally made from long- chain polyols with an averaged molecular weight of 600 to 4000, chain extenders with a molecular weight of 61 to 400, and polyisocyanates.

Dissocyanates (Soft Segments)-:

Aromatic Dissocyanates-:

a) Diphyelmethane Dissocyanates (MDI)b) Toluene Dissocyanates (TDI)c) P-Phenylene Dissocyanates (PPDI) and Naphthalene Dissocyanates (NDI)

Aliphatic Dissocyanates-:

a) Hexamethylene Dissocyanates (HDI)b) Isophorone Dissocyanates (IPDI)

Long Chain Diols (Soft Segments)-:

a) Polyestersb) Polycaprolactonesc) Polyethers

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d) Polycarbonates

Chain Extenders:

The choice of chain extender and dissocyanate determines the characteristics of the hard segment and to a large extent the physical properties of TPU. 1, 4 butanediol is the most suitable diols for TPU.

SYNTHETIC ROUTES:

TPUs are made by reacting the ingredients together at temperatures above 800 C. To get optimum results, the ratio of isocyanate groups to the sum of isocyanate reactive groups should be close to 1.0. Polymers with insufficient molecular weight are obtained if this ratio is less than 0.96, whereas thermoplastic processing becomes increasingly difficult at ratios above 1.1 owing to cross linking reactions. An average molecular weight Mn of 40,000 is sufficient for satisfactory property development. This Mn is easily obtained at ratios of 0.98 and higher.

The following are the synthetic routes:

The “one shot process” -: A simultaneous addition of a polyol, dissocyanate and chain extender in stoichiometric ratios. Polymerization methodology of either bulk or solution determine the use of solvent. Solvent is recommended for solution polymerization. The reaction mixture is heated to 80-100 0C to prepare the polyurethane elastomers. In some cases a catalyst is also recommended especially when aliphatic isocyanates are used.

Prepolymer Method-: The polyol is reacted first with the dissocyanate to give an isocyanate containing prepolymer, which is then reacted with the chain extender. The reaction can be done batch wise or continuously in a mixing chamber or reaction extruder.

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STRUCTURE OF THERMOPLASTIC POLYUREATHANE ELASTOMERS:

TPUs owe their elastomeric properties to a domain structure that is achieved by the phase- separated systems of these multiblock polymers.

One type of block, the hard segment, is formed by addition of the chain extender, for example, butanediol, to the dissocyanate, for example, MDI. The other type I soft segment and consists of the long flexible polyether or polyester chain that interconnects two hard segments as shown below in the figure.

Structure of Thermoplastic Polyurethane Elastomer

The morphology of multiphase systems will play an important role in determining the final properties of a product. By controlled variation of the morphology, desired properties of a material can be obtained. Hence, a profound knowledge of the morphology is essential for understanding structure- property relationships.

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Morphology of Thermoplastic Polyurethane Elastomer

COMMERCIAL MEANS OF PRODUCTION AND FIVE YEAR VOLUME FORCAST:

For large scale industrial production two methods are used:

Belt Process: Here all the ingredients are mixed together. The liquid mixture is then poured onto a belt, where it is allowed to solidify. The slab produced is then granulated. The granulated material can be used as such but it most often blended and extruded into more uniform pellets.

Reaction Extruder process with underwater pelletizer: Liquid streams are metered into the extruder by precision metering pumps. The reaction to polyurethane takes place in the extruder. The TSE is mated to an underwater pelletizer that pumps the melt through the die with a circular pattern that is cut into pellets by rotating blades submerged in water. The water/pellet slurry is then pumped to a spin dryer for dewatering. The system produces a spherical pellet resulting from being cut in a submerged environment. This method is a preferred.

The heat history during production is of extreme importance because the phase separation of the hard and soft segment (and hence the properties of) TPUs is temperature dependent. Thus, starting from the same raw materials, the physical properties of the resulting polymers can be very different.

The global market for TPU films is expected to reach USD 624.6 million by 2018.Automative applications accounted for the bulk of TPU film consumption in 2012 with 25% overall volume share. Film demand for building and construction

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another key product avenue is expected to reach USD 75.8 million by 2018, growing at a CAGR of 7.6% from 2013 to 2018.

The global market for TPU films was estimated to be USD 405.8 million in 2012, with corresponding market volumes of 44,457.3 tons; and is expected to grow at a CAGR of 7.5% from 2013 to 2018.

Production Process for manufacture of Thermoplastic Polyurethane Elastomer

PROCESSING METHODS:

TPUs are normally supplied as granules in moisture proof containers. They can be processed by the usual methods for thermoplastic materials as given:

Injection molding: This is by far the most used processing technique of producing parts from thermoplastic elastomers due to its high productivity. Injection molding machines and molds are very expensive because of high pressures required and complexity of the process control. However, the

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shortcomings of this technique is balanced by its ability to produce a complex finished part in a single and rapid operation.

The plastic material is fed into the injection barrel through a gravity Hooper. Upon entrance into the barrel, the polymer is heated to melting temperature. It is then forced into the closed mold that defined the shape of the article to produce. The mold is cooled constantly to a temperature that allows molten to solidify and the mold is open, the finished product is ejected and the process continues.

The injection molding is capable of producing a variety of parts from the smallest component to entire body panels of car in a single molding operation. Other parts design obtained from injection molding include threads, springs, storage containers, mechanical parts and automotive dashboards.

Injection Molding

Extrusion Process: It is a high volume manufacturing process for fabricating parts from thermoplastic elastomers. This processing technique is essential in melting raw materials and shaping them into continuous profiles. The most common methods are film and sheet extrusion, blow film extrusion, cast film extrusion, extrusion, tubing extrusion and extrusion coatings.

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The extrusion process involves heating a thermoplastic material above its melting temperature and forcing it through a die. The extruder is a heating and pressuring device that involves one or more screws operating in a heating barrel. The key determinant of the extruder’s performance is the screw. Raw thermoplastic elastomer material is fed into the barrel of the extruder and comes into contact with the screw. As a melt delivery device, the rotating screw forces the polymer forward in the barrel which is heated at a desired temperature. After leaving the screw the molten travels through screen pack/plate breaker, where the contaminants in the melt are removed. Breaker plate also creates, a back pressure in the barrel which is needed for uniform melting and proper mixing of the polymer. After that, the molten enters the die, where the cross section of the extruded product is determined.

Extrusion Molding

Blow Molding: It is a manufacturing process used to produce hollow plastic parts.

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The basic process begins with the melting of thermoplastic and extruding it through a die to form a hollow tube called parison. The parison is then clamped between two mold halves, which close around it and the parison is inflated by pressurized air until it conforms to the inner shape of the mold cavity. Lastly, the mold opens and the finished part is removed.

Basically, there are three types of blow molding used to form a parison. In extrusion blow molding, plastic is melted and extruded using a rotating screw to force the molten through a die head that forms a parison. Injection blow molding is part injection and part blow molding where the molten plastic is injected molded around the core pin and then the core pin is transferred to a blow molding station to be inflated. There are two stretch molding techniques. In one stage process, the preform is injection molded which is then transferred to a blow mold where it is blown and injected from the machine. In the two stage process, preform is injection molded, stored for a short period of time, and blown into a container using a reheat blow machine.

Blow Molding

Calendering: It is a process where large amount of plastic is fashioned into sheets by passing the polymer between a set of rollers. The rollers are

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hot and keep the polymer in its semi- molten state. This allows the molten to be rolled many times until the desired thickness is reached. The sheet is then rolled through cold rollers to enable it to go hard and then wound up in rolls.

The advantages of the calendar over the extruder are the possibility to produce embossed films, sheets and laminates and the higher output than the extruder.

Calendar Molding

KEY PROPERTIES:

TPUs were the first polymeric materials to combine both rubber elasticity and thermoplastic characteristics. The following are the properties:

Mechanical Properties:

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TPUs offer excellent physical properties, for example, high tensile strength and elongation. Depending on their chemical structures and Shore hardness, the tensile strengths of TPU vary from 25 to 70 MPa (3600 to 10,000 psi).Softer grades (75 to 85 Shore A) show lower tensile strength, whereas harder grades (50 to 83 Shore D) exhibit higher values. One of the main advantages of TPU is its high abrasion resistance.

The resistance to tear propagation is so high that even ski boot buckles don’t tear. TPUs exhibit flexibility over a wide temperature range and good resistance to many oils and greases. TPUs do not contain any plasticizers and are thus preferred for sandwich constructions with other materials such as polycarbonates and ABS.

Stress – Strain Curve

Thermal Properties:

TPUs can be used over a wide range of temperatures. The majority of articles made from TPUs can be used from -40 C up to 80 C for both long and short term applications. TPUs have as short-term resistance to temperatures up to 120 0C, although in some cases even higher temperatures can be tolerated as in secondary urethanes based on piperazine. The hard segment is the main contributor to high service temperature performance; the harder the product (more isocyanate and chain extender) the higher the service temperature. Besides being a function of the amount of chain extender, the high temperature performance is also affected by the type of chain extender.

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Hydrolytic Stability:

At room temperature TPU can be used in pure water over a period of several years without any significant changes of properties. At 80 0C, however, the mechanical properties are affected after exposure for some weeks or months. The hydrolytic stability is dependent on the structure of the polyol. Ester TPUs are less resistant than ester TPUs protected by carbodiimide. The highest resistance to water at elevated temperatures is shown by ether-ester TPUs or pure ether TPUs.

With increasing hardness TPUs become more hydrolytically stable owing to the hydrophobic character of the hard segment.

Polyurethanes are sensitive to acids and bases. At room temperature they are attacked slowly by diluted acids and bases. At higher temperatures they cannot withstand concentrated acids and alkalies. Different acids behave differently in contact with various urethanes.

Oil, grease, and solvent resistance:

Nonpolar solvents such as hexane, heptane, and paraffin oil have almost no effect on the polar polyurethanes. Even at high temperatures only a slight swelling is observed.

TPUs exhibit excellent resistance to pure mineral oils, diesel oils and greases. Some technical oils and greases can attack TPUs at elevated temperatures owing to the additives they may contain.

Chlorinated hydrocarbons or aromatic liquids such as toluene cause a very severe swelling of TPU. The degree of swelling is dependent on the structure of the polyurethane. Ester types swell less than ether types and hard polyurethanes swell less than soft ones.

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Some polar solvents (e.g.tetrahydrofuran, methylethylketone, or dimethylformamide) are capable of partially or completely dissolving TPUs. For example, soft linear polyurethanes can be dissolved in methyl ethyl ketone-acetone mixtures and applied as adhesives, whereas harder linear polyurethanes are dissolved and applied as textile and leather coatings.

TPUs are generally stable in contact with petroleum hydrocarbons if they do not contain alcohol. Fuels that contain aromatics or alcohols cause a reversible swelling of the polymer, the extent of the swelling depends on the amount of such ingredients.

Resistance to Microorganisms:

Soft ester TPUs can be attacked by microorganisms after long contact with moist earth. Soft and hard ether TPU’s, ether based TPUs, or hard TPUs are normally resistant to such attack. A slight discoloration at the surface of the articles can be caused by fungus, but it does not indicate a mechanical damage of the material.

UV resistance:

TPUs based on aromatic isocyanates exhibit yellowing, although that only minimally affects the properties of the polymer. Special UV absorbers can be used to minimize the yellowing.

PRODUCT LIMIITAIONS:

Thermoplastic polyurethane may appear as an ideal product, however there are disadvantages when considering the use of TPUs. Some of the disadvantages are:

Some grades of TPU have a short shell life and if not used within that timeframe they must be disposed of.

Drying time is required before processing can begin.

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Thermoplastic polyurethane is not as cost effective as other alternatives and is therefore not always the first option that is used.

Narrow hardness range than other TPEs. The chemical resistance is type dependent.

PROCESSING LIMITATIONS WITH TPU:

Like many materials, TPU can be affected by too much moisture. TPUs are hygroscopic materials, which absorb moisture rapidly. A desiccant should be used for dehumidifying the hopper.

Also the rate of extrusion of TPU resins can be rate limited by the occurrence of solid polymer fragments in the extrudate.

ENVIROMENTAL ISSUES:

Thermoplastic polyurethane elastomer is not known for being ecofriendly. It is harmful for the environment during production as the majority of TPUs are produced from fossil fuels which cause a higher carbon footprint and TPU product can take many hundreds of years to decompose.

At present there is an emerging trend in the usage of bio-based raw materials in the manufacture of thermoplastic polyurethane elastomers.

QUALITY CONTROL:

The following are the specific standards to adhere to when manufacturing and testing TPU materials for a variety of end uses.

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VDE Specifications-: (verband der Electrotechnik/Electrotechnik & Informationtechnik e.V)-: TPU is specified in the VDE 0282-10 standard of EPR insulated high voltage power line with polyurethane jacketing. This standard conforms to the Cenelec harmonization document HD 22.10 S1 (Cenelec= European committee for electronic standards). The letters TMPU are printed on these cables to indicate that jacketing is made from TPU.

UL 94 (Underwriters Laboratories)-: TPU grades that are generally not flame retardant are generally classified as HB.

Thermomechanical Analysis (TMA)-: TMA measuring is often used to analyze a TPU’s performance where the expansion coefficient, melting and softening points can be assessed.

ISO -: Manufacturing standard should be based on ISO 9001 standard.

SAFETY ASSESSMENT:

One of the raw material used in the production of TPU called dissocyanates is known to cause irritation of the eyes, nose, throat, lungs and skin. They can also cause allergic reactions (sensitization) of the skins and lungs.

The health concerns relating to a broad spectrum of polyurethane product development includes:

Raw materials Polyurethane production and process and chemicals Final Polyurethane products

PROFITABILITY ESTIMATES:

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As given in the below worksheet calculation performed for the proposed project whose life span is 20 years. The project is profitable because the ROI is at 7.57% for this new capital intensive project. The payback period is 5.68 years because the initial investment for the project is expensive, since the cost of the technology, plant and EPC comes to $ 20 million.

The proposed plant production capacity is at 2000 TPA, with the availability to increase the production capacity in the future depending on demand.

The selling price (Ex Works) is at $ 6500 per ton; with this price the ROI is at 7.57% and the payback period is at 5.68 years. If we can increase the price to $ 7000 per ton; the ROI becomes 10.4% and the payback period becomes 4.89 years.

However, considering our competitors in the market, it is advisable to start with $ 6500 per ton as the price required for us to penetrate the market of thermoplastic polyurethane elastomers in the US. As the demand increases, we can gradually increase the price; also in the case of increase of raw material prices, we have to increase the price of our TPU correspondingly.

For this calculation of $ 6500, I have taken the following raw material prices-:

Cost of methylene diphenyl diisocyanate (MDI) at $2500 per ton. Cost of polyol at $ 3400 per ton Cost of 1, 4 butane diol at $2800 per ton.

The selling price of our TPU is $ 6500, the cost of production per ton of TPU is $ 5170.75. By selling 2000 tons of TPU per annum, the revenue generated is $ 13,000,000. But the cost of goods before the sales and marketing costs (COGS) is at $ 10,341,500. Therefore the gross contribution is $ 2,658,500. The annual marketing cost is estimated to be $45,600.Thus, the gross margin for this proposed project is 10.1% for the first year.

Profitability Worksheet and graphs for the proposed TPU plant:

The profitability worksheet and graphs for the proposed 2000 TPA plant is given in the following pages.

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Proposed Plant Production Capacity 2000 TPA

I CAPITAL COST

1 Cost of 4 acre land in Texas (El Paso) 40000 $Cost for 20 years 2000 $ per year

2 Cost of the plant,machinery, technology and construcntion 20000000 $

3 Assume life span of the equiments are 20 years (complete Deperciation) 20 years

4 Plant capital cost per year 1000000 $

I I OPERATING COST

1 Raw materials cost

1.1 Cost of MDI 2500 $/ton 1.1.1 Consumption of MDI for 2000 tons of TPU 400 TPA 1.1.2 Total Cost of MDI for 2000 tons of TPU 1000000 $

1.2 Cost of Polyol 3400 $/ton 1.2.1 Consumption of polyol for 2000 tons of TPU 1600 TPA 1.2.2 Total cost of polyol for 2000 tons of TPU 5440000 $

1.3 Cost of 1,4 Butane diol 2800 $/ton 1.3.1 Consumption of 1,4butane diol for 2000 tons of PTU 200 TPA 1.3.2 Total cost of 1,4 butane diol for 2000 tons of TPU 560000 $

1.4 Cost of utilites (electricity) 8.64 cents/kWh 1.4.1 Power consumption by the plant 10 kWh/kg 1.4.2 Power consumption by the plant for 2000 tons 20000000 kWh 1.4.3 Total cost of power consumption annualy 1728000 $

2 No. of employees 102.1 No. of workers (operator,maintance,packaging) 62.2 No of supervisor 12.3 Plant Manager 12.4 Administration and accounting 2

3 Annual Salaries of the Employees3.1 Worker's Salary 41000 $3.2 Supervisor salary 60000 $3.3 Plant Manager salary 82500 $3.4 Adminstration and accounting salaries 54000 $

4 Total Annual Salary expenses 496500 $

5 Estimated maintenance cost including operation spares 40000 $ per annum

6 Plant overheads 30000 $ per annum

7 Marketing Cost 45000 $ per annum

TOTAL COST 10341500 $ per annum

TOTAL TPU SOLD PER ANNUM 2000 tons

Cost of manufacture per ton of TPU 5170.75 $/ton

PROPOSED SELLING PRICE OF TPU PER TONNE 6500 $/ton

TOTAL SELLING PRICE FOR 2000 TONS OF TPU 13000000 $

GROSS PROFIT (PBT) 2658500 $

Tax rate in the US on business @ 43% of Gross Profit 1143155 $

NET PROFIT (PAT) 1515345 $

Return on Investment (ROI)-:(Net Earnings/ Total capital investment)* 100 7.57673 %

Annual Depriciation @10% on plant and machinery 2000000 $

Cash Flow 3515345 $

Pay back period (PBP)-: (Total permanent investment)/ Annual Cash flow 5.68934 years

PROFITABILITY ESTIMATES FOR THE PROPOSED PROJECT

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YEARS UNIT S.P. PRICE ($/ton)

UNIT COST($/ton)

UNIT SALESTPA

MARKETING COSTS ($ per annum)

Year 1 6500 5171.7 2000 45600Year 2 6500 5500 2000 69900Year 3 7000 6000 2000 29750Year 4 7500 6500 2000 15000Year 5 8000 7000 2000 10000

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

Revenues Gross Contribution Profit/Loss

Projected Profit and Loss Chart for five years

YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%

Gross Margin

Gross Margin

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Projected Gross Margin Chart for five years

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

Sales CostsMarketing Costs

Project Sales and Marketing Cost for five years

YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

0 500 1000 1500 2000 2500

Unit Sales

Unit Sales

Projected Unit Sales for five years

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OTHER MARKET RISK FACTORS:

Sales orders on short term basis-:

Customers’ order may vary significantly from period to period and it is difficult to accurately project future order quantities or the magnitude of the order. Furthermore, there is no assurance that same customers will continue to place order at the same levels in prior period. If the customers reduce their purchase orders or cease to place orders with our company the business of our company and its financial performance may be adversely affected.

Fluctuations in the price and supply of raw materials-:

The cost of raw materials used in the production of TPU for our company, is subject to price trend of, and varies with the market conditions from the petrochemical industry where these raw materials are derived from.

Also, raw material supplies are subject to a variety of factors that are beyond its control, including market shortages, supplier’s business interruptions, government control and regulations of energy industries, weather conditions and overall economic conditions.

Competition:

TPU business faces increasing competition. Increase in competition may have adverse effects on our sales and selling price of our products. As a result, the profitability of our group will be adversely affected.

Dependence on growth of various industries-:

The future growth of our TPU business will depend upon on the continuous growth of, among others, like the automotive and sport shoes and

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recreational shoe industries. Any significant slowdown in the growth of these industries, can greatly affect our sales and in turn the revenues of our company.

OTHER TECHNICAL RISK FACTORS:

Static nature of TPU-:

During processing the TPU is subject to electrostatic charging which can cause failure of electronic components and computer chips and also possess an ignition hazard since it is capable of igniting combustible gases, vapors and dusts. To address this problem, we should try to make the TPU granule antistatic.

Environmental effects on TPU-:

TPU has instability in certain environments like water, ultraviolet radiation, microorganisms and nitrogen dioxide. However, with the application of additives or by polymer chemical structural changes they can be stabilized.

TECHNICAL SUPPORT:

The process technology supplier for the manufacture of TPU provides the following technical support in consultation and engineering of the manufacturing process for TPU. Some examples of this consultation assistance includes reactor screw profiles, formulation and equipment specifications in addition to operating manuals. They also provide hands on training in the operation of the process and equipments to operators. Furthermore, they provide assistance if there is any technical problems associated with the processing equipments. Two years essential spare will be provided by them in the event of us placing the purchase order and warranty of the equipments is for one year.

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SPIN OFF TECHNOLOGY (OTHER PRODUCTS):

A potential new application of thermoplastic polyurethane elastomers is for laser sintering. This is because the TPU has higher toughness, elasticity and strength when compared to primarily soft, elastic materials and rigid thermoplastics such as polyamide which were commercially available for selective laser sintering.

Another promising application for TPUs is in the use for solar encapsulation for solar panels; which help to protect solar panels from various hazards and improve the efficiency. The use of solar panels is increasing across the world due to lower production costs, this in turn will increase the demand for TPU’s as material to be used in solar encapsulation because of their good abrasion resistance.

RECOMMENDATIONS:

Considering the economic growth especially in the developing countries like China and India and the economy of the United States is on the path to recovery, there will be a demand for thermoplastic polyurethane elastomers for the automotive industries respectively in these countries.

The growth and demand for electronic products like smartphones, tablets, and laptops will help to fuel the demand for TPUs as they are durable and tough elastomers which will help to protect sensitive electronic products.

Another promising application of TPUs are in the medical field where they are used for making Cather and general purpose tubing, hospital bedding, surgical drapes, wound dressings, as well as variety of injection molded devices Their most common use is in short term implants.

Since from the proposed calculations, the ROI is 7.5%, which is above the minimum 4% required for a capital intensive project and there is profitability from year one if we sell our product at $6500 per ton, coupled with a strong demand for this product in the United States, which will be our primary market. I recommend that we proceed with this project.

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REFERENCES:

1) A BRIEF HISTORY OF ELASTOMERS -: PROSPECTOR2) THERMOPLASTIC ELASTOMERS (2ND EDITON)-: G.HOLDEN,N.R. LEGGE,R.QUIRK.H.E.SCHROEDER3) POLYUREATHANE-: WIKEPEDIA4) GLOBAL OVERVIEW OF THE THERMOPLASTIC POLYUREATHANE MARKET-: IAL CONSULTANTS

(JULY 2013)5) POLYUREATHANE ELASTOMERS -: IHS(FEBUARY 2013)6) WWW.ALIBABA.COM7) WWW.REUTERS.COM8) WWW.MARKETSANDMARKETS.COM9) THERMOPLASTIC ELASTOMERS 2006: MUNICH, GERMANY10) HANDBOOK OF PLASTICS, ELASTOMERS AND COMPOSITES, FOURTH EDITION-: AICHE (ACESS

ENGINEERING)11) WWW.MERQUINSA .COM12) SYNTHESIS AND CHARACTREZATION OF SPEICALTY POLYUREATHE ELSASTOMERS-: FAZAL UR

REHMAN (UNIVERSITY OF AGRICULUTRE FAISALBAD, PAKISTAN,2010)13) TWIN SCREW EXTRUSION FOR TPU PRODUCTION : CHARLIE MARTIN, LEIZTERIZT14) WWW.COPERION.COM15) REPORT BY GRAND VIEW RESEARCH ON GLOBLA TPU FILMS MARKET FORCAST FROM 2013-

2018.16) THERMOPLASTIC ELASTOMERS (APPLIED SCIENCE, RMIT UNIVERSITY, MELBOURNE AUSTRILIA)-:

ROBERT SHANKS AND ING KONG.17) WWW.CIVILENGINEERSFORUM.COM18) WWW.NATURAL-ENVIRONMENT.COM19) TROUBLESHOOTIN TPU RESIN EXTRUSION RATE LIMITATIONS DUE TO SOLIDS IN THE

EXTRUDATE20) WWW.BAYSTATEPOLYMER.COM21) WWW.HUNTSMAN.COM22) AMERICAN CHEMISTRY CONCIL23) WWW.ORBICHEM.COM24) CHEMICAL PROCESS TECHNOLOGY -: SECOND EDITION:JACOB A MOULIJIN,MICHIEL

MACKEE,ANNELIES E.VAN DIPIEN25) WWW.SALARY.COM26) WWW.ENGINEERING.COM-: NEW THERMOPLASTIC POLYUREATHANES FOR LASER SINTERING27) WWW.ALLIEDMARKETRESEARCH.COM-:GLOBAL SOLAR ENCAPUSLATION MARKET BY

MATERIALS28) WWW.HKEXNEWS.HK-:RISK FACTORS-HKENEWS29) WWW.BASF.COM30) HANBOOK OF ELASTOMERS (SECOND EDITIION)-: ANIL K BHOWMICK,HOWARD STEPHENS31) GALA INDUSTRIES INCORPORATION

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Thermoplastic polyureathane elastomer