Demand for catalysts outstripping market growth

Market conditions for original equipment manufacturers continue to be challenged in many areas of the world, but for Tier 1 suppliers in the catalysts segment, there is a breath of fresh air.

Automotive Industries (AI) asked Xavier Susterac – Vice President Mobile Emissions Catalysts BASF, how the market situation is affecting BASF.

Susterac: While automotive production in Europe has declined year over year, our business remains strong, and we expect continued robust growth for the catalysts business in the years ahead. This will largely be driven by new regulations such as Euro 6, which will drive increased demand for new and advanced emissions catalysts despite the current market weakness for light duty vehicles. The same situation applies for heavy duty vehicles, which generally require larger and more sophisticated emissions control solutions to meet increasingly stringent regulations. Looking ahead, based on prevailing industry estimates, we expect the European car market to return to growth, by approximately 5% in the light duty market and 3% in the heavy duty market over the next five years, on average.

AI: How do you see the catalytic technology developing?

Susterac: As I noted, the light duty selective catalytic reduction (SCR) market is going to grow with the introduction of Euro 6, and we are investing heavily in this technology. To mention two examples: We’ve identified a need in the market to combine some catalytic technologies into a more advanced solution, such as our SCR on Filter System. We anticipate being a major player in this new market. Another, more recent, example is gasoline
particulate filters. Euro 6C, which starts in 2017, is likely going to make filters necessary for many gasoline engines. The question now is how to combine the function of the three-way catalyst and the filter. This is a good example of innovation for the future.

AI: What does BASF’s portfolio include?

Susterac: Our portfolio of products and services covers everything for coated products. We are the catalyst producer in the value chain. We develop the catalytic formulation to meet the specifications of the OEM. We produce the precious metal slurry, coat it on a substrate, send the catalytic solution to a canner to be prepped for installation in the vehicle. Basically, we cover the full portfolio of gasoline, diesel light duty and diesel heavy duty solutions. In terms of services, ours is a technology business. We work closely with our OEM customers to drive innovation. I think this industry is all about partnerships. All of our engineers spend a lot of time with customers, and together they come up with solutions to meet increasingly stringent emissions requirements in the most effective and efficient manner.

AI: What efforts do you make to meet OEMs stringent quality standards?

Susterac: For us it is very important to have the right processes in terms of manufacturing and development. When you create a new product or solution in this field it takes a while to move into full production. There are a lot of steps, and in the end it is all about quality to ensure that we always meet or exceed the required standards. We have quality engineers in all our labs globally. And we make sure that the quality for a given customer product is the same around the world.

AI: What are your investment plans for the future?

Susterac: For us there are different levels of investment. First is people, and then production lines and capacity. As the business continues to grow there is the need for more capacity, new lines if you like. We have already announced two major investments for a new SCR line, and we also are also investing in the world of filters – a new CSF (catalyzed soot filter) line. We are also investing massively in heavy duty. But, as I said, our investments are not just about lines. They are also focused on people – our commitment to the people and the region of Lower Saxony. At the same time, our business continues to invest in other areas as well, including additional production capacity for specialty zeolites – a key raw material for our diesel catalysts solutions – at a new plant being built in Ludwigshafen, which will come on line in 2014.

AI: How is BASF positioned globally in terms of manufacturing and R & D?

Susterac: Having a truly global presence is one of our key strengths. Our customers are virtually all global. Our manufacturing must match this geographic diversity, and so we have presence in all regions. In terms of R&D, we follow our customers.

AI: How important is the automotive market for BASF?

Susterac: It is big, very big. In fact BASF is the largest chemical provider to the automotive industry globally. Approximately 13% of our sales in 2011 were generated by the automotive sector – amounting to the published figure of 9.5 billion Euros. There is an objective to reach 17 billion Euros by 2020.

AI: What are the expectations for the new Global Business Unit Battery Materials?

Susterac: In 2020, the global market potential for batteries for electromobility alone could be 20 billion euros, about a quarter of which relates to our strategically relevant market of cathode materials and electrolytes, as we are not a battery producer, but a materials producer. We estimate the sales potential for BASF to be at least 500 million euros by 2020. BASF’s goal is to take a leading position in the future in the battery materials market.

AI: What is your strategy for a sustainable future?

Susterac: The catalyst business is built around sustainability, with emissions control at its core. In fact, our mobile emissions business invented the catalytic converter and, since 1974, our technologies have prevented more than 1 billion tons of pollutants from reaching the atmosphere.