Songwon gears up for business in the U.S. and Middle East

By Robert Grace
Associate Publisher & Business Development Director

Published: June 11, 2013 12:26 pm ET
Updated: June 12, 2013 10:38 am ET

Related to this story

Topics Materials, Materials Suppliers, CHINAPLAS, K 2013

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."

Additionally Songwon Group Chairman and CEO Jongho Park noted: "These Q1 results indicate that Songwon is on track to achieve its business plan for 2013. Slow but steady recovery in the USA and China economies and moderate growth in the emerging markets will support slight growth in Q2 and Q3 2013."

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.]

In the Middle East, Schlaepfer said, Songwon has changed course slightly. At Chinaplas 2012 in Shanghai a year ago the firm said it had secured a lease on some land for an OPS manufacturing facility in Bahrain. Abu Dhabi had been the firm's first choice, but it initially couldn't get the land it needed there. Then, he said, "we got an irresistible offer in Abu Dhabi from one of the big polymer producers there," and they refocused on their original target. The change "delayed the whole thing by about six months," he said, but Songwon now is forging ahead with plans for a $15 million to $20 million greenfield plant in the United Arab Emirates' capital. Songwon may yet look at Bahrain as a possible production site, but not for a couple of years, Schlaepfer 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.


Comments

Songwon gears up for business in the U.S. and Middle East

By Robert Grace
Associate Publisher & Business Development Director

Published: June 11, 2013 12:26 pm ET
Updated: June 12, 2013 10:38 am ET

Post Your Comments


Back to story


More stories

Image

PolyOne says new Shanghai center will ease collaboration across segments

April 24, 2014 2:34 pm ET

PolyOne Specialty Engineered Materials is opening an innovation Center in Shanghai's Jinqiao development zone that will serve as its new Asia Pacific ...    More

Biopolymer firms report success with PHA pilot production

April 24, 2014 1:30 pm ET

Biopolymer developer Meridian Inc. and Tate & Lyle plc have reported successful pilot production of Meridian's process to make polyhydroxyalkanoate,...    More

Songwon acquires division of India's SeQuent

April 24, 2014 12:22 pm ET

Songwon Industrial Group of South Korea has signed a deal with SeQuent Scientific Limited, India to acquire SeQuent's specialty chemicals business.    More

Image

Performance Plastics unit helps lead to increase in sales for Dow Chemical

April 24, 2014 9:57 am ET

Dow reported turnover of $14.5 billion April 23, including an adjusted 6 percent increase in sales at its performance plastics operation, which it...    More

Image

Milliken expanding SC plant for additional PP clarifying agent capacity

April 23, 2014 3:42 pm ET

American chemical company Milliken & Co. has announced plans for a major expansion in capacity for its Millad NX8000 clarifying agent for polypropylen...    More

Market Reports

Market Data Book - Rankings & Lists

A one-stop download of Plastic News' exclusive annual lists and processor rankings containing essential data including sales, employees, end markets, materials and more.
EXCLUSIVE EXCEL FEATURE: full mailing address details for available plant locations.

Learn more

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report provides analysis and discussions of economic and political conditions, market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as strategies being implemented by thermoformed packaging companies. In addition, there are reviews of 25 leading thermoformers in the packaging segment, assessing their growth initiatives and performance metrics over 10 years.

Learn more

Mold Making and Tooling Review and Outlook 2014 North America

This report provides in-depth analysis of the mold and toolmaking market for North America, including discussions of trends, opportunities, threats, the latest developments in production and labor and equipment trends impacting moldmakers.

Learn more

Upcoming Plastics News Events

May 6, 2014 - May 8, 2014Plastics in Medical Devices 2014

May 12, 2014 - May 12, 2014Plastics News Brazil Pharma Summit

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 3, 2015 - February 7, 2015Plastics News Executive Forum 2015

More Events