GUANGZHOU, CHINA – South Korean plastics additives maker Songwon Industrial Group is continuing its relentless expansion in key global regions with the creation of two new entities in the Middle East, and the planned opening by April 2014 in Abu Dhabi of its next plant to make one-pack systems.
This follows on the heels of the firm saying it is close to launching OPS production at a new, previously announced facility in Houston. The Texas plant will be housed within its warehousing partner's existing facility and "they will run it for us, in a sort of tolling arrangement," according to Philippe Schlaepfer, executive vice president of corporate development. Total investment there should be less than $10 million, he estimated.
Both facilities will have annual production capacities of about 7,000 metric tons, or 15.4 million pounds, said Schlaepfer in a May 22 interview at the Chinaplas 2013 show in Guangzhou.
One-pack systems are products that combine a wide variety of complex additives into an integrated, dust-free pellet form that can be custom formulated, and Songwon said this product has "grown in strength and popularity."
On May 23, the publicly traded, Ulsan-based firm reported positive 2013 first quarter financial results, with net profit jumping sixfold from 1.09 billion South Korean won ($967,200) to KRW 7.72 billion ($6.83 million), on basically flat sales of KRW 174.3 billion ($154.3 million).
In a statement the 650-employee company said, "Sales of polymer stabilizers remain the backbone of the results for this quarter and most regions have shown a slight increase in volumes. The sales result reflects the pressure that has been put on price and a continuing trend of increasing raw material and energy costs."
He said that demand for polymer stabilizers — which represent about 70 percent of Songwon's business — in the United States and Middle East is on the increase, driven by shale gas and lower raw material costs that have stimulated growth in the polyolefin segment.
Songwon's expansion of dioctyl tin oxide (DOTO) production by 60 percent at its plant in Ulsan will come on stream mid-year as planned, which Park said should boost sales of tin intermediates in the second half of 2013. He also noted that Songwon's distribution arrangement with Italy's Sabo SpA, struck last October, is proceeding as planned. Sabo, based in Levate, is a leading producer of monomeric and polymeric hindered amine light stabilizers (HALS), and the tie-up with Songwon gives it global reach for its products.
[Songwon highlighted the relationship with Sabo at a pre-K event last week in Mainz, Germany. The company said the distribution deal will allow the company to extend its global reach.
Chief Operating Officer Maurizio Butti said the company is particularly keen to target the Middle East, India, China and South America.
Sabo is the second biggest producer of HALS, an additive for light stabilization of polyolefins used in automotive, fiber and film applications. It posted 2012 sales of $165 million.]
Sabo will announce a licensing agreement for a high performance HALS at K 2013, Vischetti said.]
As part of its Middle East strategy, Songwon also has done some financial restructuring. It sold 40 percent of the capital of Songwon Additive Technologies AG to new business partners Polysys Industries LLC and Pan Gulf Holding Company WLL, and then proceeded to establish two new entities early in 2013:
c The one in Dubai, called Songwon Additive Technologies - Middle East FZE, is 60 percent owned by the Korean company, and will serve as its sales arm for the Mideast region.
c In Abu Dhabi, Polysys Additive Technologies - Middle East LLC is a partnership with Polysys Industries LLC, and will oversee operation of the planned OPS production facility there.
Once again, the shale gas revolution in North America is impacting the strategic plans of firms such as Songwon. Schlaepfer said "It's a big deal. It's amazing the kind of money being invested" in shale gas exploration. Globally, he predicted, based on polyolefin resin growth rates of 4 to 5 percent per year, "our industry would need to build, every two to three years, a new 20,000- to 30,000-ton antioxidants plant" to keep pace. That translates to 44 million to 66 million more pounds per year of production capacity.
Charlotte Eyre, assistant editor at European Plastics News, contributed to this report.