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Songwon moves forward with first US plant

By: Robert Grace

May 28, 2012

South Korean plastics additives maker Songwon Industrial Group is closer to putting its first plant in the U.S., while also doubling production capacity in Germany, stepping up activity in the Middle East and retooling its strategy in Asia, according to a senior company official.

Philippe Schlaepfer, executive vice president of corporate development, outlined the recent moves and evolving strategy in an April 20 interview at Chinaplas 2012 in Shanghai.

Songwon continues to invest much of its efforts into what it calls “one-pack systems” — products that combine a wide variety of complex additives into an integrated, dust-free pellet form that can be custom formulated. The firm says these OPS products offer excellent uniformity and certified composition, while more-accurate feeding also can save money by reducing the actual dosage of individual additives.

Schlaepfer revealed, for the first time publicly, that Songwon has “pretty advanced plans” to put a one-pack production facility in the United States — most likely in Houston, near its U.S. headquarters and major customer base of polyolefin producers. The site, which is likely to be about 54,000 square feet, would be ready by mid-2013, and include manufacturing and warehousing. Such OPS production sites typically involve investment of $15 million to $20 million, he said.

Ulsan-based Songwon also announced at Chinaplas that it is doubling annual OPS production capacity — to nearly 31 million pounds — at the plant it acquired via the purchase in December of Germany’s ATG Additives Technology Greiz GmbH. At the time of the deal, Songwon Chairman and CEO Jongho Park committed to adding 5,000 metric tons (11 million pounds) of capacity to make its Songnox high-heat OPS range of products that are finding use in harsh applications in the automotive industry. But now, just four months later, the firm already is expanding those plans to allow for even more output.

“Demand is very healthy,” said Schlaepfer, who noted that the German plant also is supplying customers in the Middle East. In that region, he said, Songwon has signed memorandums of understanding with partners to build OPS manufacturing sites in both Bahrain and Abu Dhabi.

In Bahrain, Songwon already has acquired the land and currently is doing engineering work on the site, which should be operating by the second quarter of 2013. The Abu Dhabi facility should be ready by late 2014 or early 2015, he said. Both plants will source their raw materials from South Korea.

Songwon has formed a Swiss holding company — Songwon Additive Technology AG — that owns all of ATG, and which is the partner in the Middle Eastern ventures with Saudi Arabia’s Pan Gulf and Abu Dhabi’s Polysys Corp., Schlaepfer said.

Meantime, some of Songwon’s previously announced moves in Asia are not coming to fruition. One of its planned Chinese joint ventures did not happen, which Schlaepfer said prompted the firm to put on hold plans for an analytical laboratory in Shanghai that it originally expected to have opened by now.

And efforts to complete an Indian joint venture called Songwon HPL Additives Pvt. Ltd., designed to make polymer stabilizers and OPS products in Dudhola, near New Delhi, have stalled. More news on that venture — which was unveiled with some fanfare at the K 2010 trade show in Germany — is expected shortly.

Full financial results for 2011 are due out shortly for publicly held Songwon, now the world’s second-largest maker of polymer additives. The company trails only Germany’s BASF SE, which owns Swiss additives giant Ciba Holding AG. It’s expected that Songwon will announce that its global sales last year exceeded 600 billion South Korean won (more than $526 million) — up from about 550 billion won in 2010.