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

2014 sees modest sales increase, but profit decrease, for Dow Chemical

January 29, 2015 4:20 pm ET

UPDATED — Dow Chemical Co. delivered modest sales growth in 2014, but the firm's profit took a tumble.    More

Image

Resin prices continuing to tumble

January 29, 2015 2:24 pm ET

The ongoing slide in crude oil prices is taking commodity resin prices down as well.    More

Image

Materials firms look for stock rebound

January 29, 2015 1:52 pm ET

DuPont Co., A. Schulman Inc. and Rogers Corp. thrived amid the stock market chaos of 2014, but the other 12 publicly held materials firms tracked by...    More

Image

Chemtrusion, Mytex Indiana compounding plant set for expansion

January 29, 2015 1:35 pm ET

Japanese and American partners in a compounding plant in Indiana plan to expand the facility.    More

Image

DuPont-Chenguang JV to produce fluoroelastomers in China

January 29, 2015 12:30 pm ET

DuPont Fluoropolymer Solutions and Zhonghao Chenguang Chemical Research Institute Co. Ltd. are proceeding with a 50-50 joint venture to serve the fast...    More

Market Reports

Plastics in Automotive: Innovation & Emerging Trends

This special report newly released by PN and sponsored by The Conair Group examines current trends in the use of plastics in automotive, materials innovations and the changing landscape. It includes a review of legislative/regulatory activity impacting vehicle development and lightweighting, market opportunities & challenges for mold and toolmakers, innovative design strategies being implemented by major OEMs and suppliers, as well as a review of key indicators in Canada, Mexico, Brazil and China.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Injection Molding Market Analysis & Processor Rankings

Plastics News BUNDLED package contains our in-depth Market Analysis of the Injection Molding segment. You will gain keen insight on current trends and our economic outlook.

As a BONUS this includes PN's updated 2014 database of North American Injection Molders RANKED by sales volume. Sort, merge, mail & prospect by end market, materials processed, region, # of plants and more.

Learn more

Upcoming Plastics News Events

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

More Events