Industry's Future
During the next several years, North America faces (i) a decline in the availability of asphalt, (ii) higher costs for asphalt which may still be available and more importantly, (iii) a significant decline in asphalt quality, all of which threatens the roofing manufacturer’s ability to provide a high quality roofing product, significantly increases the costs of paving our highways and perhaps impacts the life cycle of those highways as well.
Phase 2 of the 1990 U.S. Clean Air Act, scheduled to be fully implemented by the end of 2008, requires that all refiners invest large sums of capital to remove sulfur from motor fuel products or cease operation.
The North American roofing community requires asphalt that is typically softer than asphalt normally used in a paving mix. The majority of refiners who generate asphalt will typically target a paving grade as it assures them of a commercial outlet for their crude oil bottoms and allows them to remove more fuel value from the processed crude oil than would be the case in producing a roofing grade of asphalt. Availability of “straight-run” roofing asphalt (asphalt that needs no blending or modification to process effectively) has declined sharply over the last several years and will be even more impacted by the effects of the 14-15 cokers planned for start-up in the next three years.
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Large City Production |
Refining decisions, driven by the need to generate more motor fuel, recover investments for Phase 2 implementation and to improve return on investment (ROI) or return on capital employed (ROCE), will not typically reflect or even consider the roofing manufacturer’s or paving contractor's quality requirement for asphalt. Crude oil selections will be based on total refining economics, not the selling price of asphalt, regardless of the end use.
Roofing manufacturers or their suppliers will need to become more diligent in where and how they source asphalt feedstock, measuring consistency of the asphalt used, and continually monitoring asphalt durability (long-term aging) characteristics.
Over the next 4 - 5 years, the roofing community faces a significant challenge to secure the needed quantity of acceptable asphalt. Options these companies will consider include (1) adding process oils or lube additives (at much higher costs) to replace the declining soft components (2) adding chemical modifiers to bridge the quality gap in the more readily available but harder paving asphalts, (3) using catalysts to improve a lower quality asphalt, or (4) processing agreements to generate roofing quality product and at costly (on-purpose) economics.
A major portion of the asphalt used for roofing and paving is today being modified by the addition of certain polymers such as SBS, ERP, EVA, APP or Vestomer® to add select functionalities for the end uses. These polymers provide elongation, elastic recovery, wear resistance and enhanced thermoplastic characteristics at a wide range of temperature and other environmental conditions. Use of these polymers allows new asphalt compounds to yield longer life highways and more resilient roofs on many commercial buildings, schools and hospitals.
As asphalt quality declines, its polymer affinity is expected to also decline, requiring additional polymer to compensate or using chemical (or other) modification to offset or delay that decline. Initially, a paving contractor may add more polymer to accommodate less compatible asphalt in paving mixes. As quality (polymer affinity) of the asphalt continues to deteriorate, this expensive choice will also become less effective.
These changing circumstances represented an opportunity for development of a family of polymer modifiers to (a) improve or maintain weathering characteristics for shingle manufacturers, (b) improve polymer affinity in the case of SBS, APP or other polymer modified products, (c) improve processing characteristics of filled asphalt compounds, (d) allow use of lower cost and more readily available asphalt feedstock, all without compromise of the roofing manufacturers warranty requirements or creating impediments to meeting DOT paving specifications.
This family of materials must be designed to fit into a vast range of chemistries found in asphalt, which naturally varies in composition based on the different crude oils used to generate it. In some cases, they may act as compatibilizers or as cross-linking agents to improve the durability characteristics of the composition. In other cases, these materials may provide different functionality to the compound and the finished product.
Considering the size of the asphalt market and the impacts of these expected changes in asphalt quality, the challenge is significant.
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Longer Lasting Highways |
Certain asphalts, due to their chemical composition as derived from the crude oil, are far more compatible with the SBS, EPR, EVA and APP polymers than with other asphalt. Applications extend beyond roofing products and add substantial benefit to paving, adhesive and sealant formulations, improving polymer affinity, yielding a stronger polymer-asphalt-aggregate matrix and creating a lower cost and longer lasting highway pavement.
It’s estimated that paving in the U.S. uses 31-35 million tons asphalt and that 60% of paving asphalt is modified to a 3-4% level with SBS, EVA, Vestomer or other polymers such as ground tire rubber (GTR). A conservative estimate of polymer usage exceeds 1 billion pounds each year, into paving alone.
The roofing industry uses 5-6 million tons of asphalt each year and approximately 30% of this roofing asphalt is modified with polymers, divided between SBS and APP polymers. We estimate the North American roofing demand for SBS represents a demand of more than 100 million pounds of this polymer.
Subject to the end use specifications for paving and roofing and the selected formulation to meet them, some of these 1.1 billion+ pounds of polymer might be replaced or reduced by the use of our ERMs, derived from a GTR platform, or from use of our other modifier chemistries. Through use of these unique modifier chemistries, the effectiveness of SBS, EPR, EVA, APP or Vestomer® may be significantly improved. | 
