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Songwon eyes major revenue boost

By: Robert Grace

October 18, 2013

DÜSSELDORF, GERMANY — As part of its strategy to grow revenues by a third to $900 million by 2015, South Korean additives maker Songwon Industrial Co. Ltd. (Hall 6/C79) rolled out a new line of polymer stabilizers, showcased its latest distribution partner and provided an update on its various international expansion plans.

One might scoff at such a bold revenue prediction, except that it is in line with Songwon's performance in recent years. Founded in 1965, sales for the publicly held firm grew by more than 150 percent from 2005-2012, and reached 680 billion Korean won ($634 million) in fiscal 2012, according to Chief Operating Officer Maurizio Butti. It reported operating profit of KRW 57.6 billion ($53.7 million) last year.

The company announced its new line of SongXtend stabilizers Oct. 18 at K 2013 in Düsseldorf. The two general-purpose packages — SongXtend 1101 and SongXtend 1102 — are said to allow poly¬propylene producers and processors to maintain high-temperature manufacturing while safeguarding the polymer's desired properties such as high heat stability. Three other new stabilizer packages target the auto industry and are designed to address fogging and odor issues in car interiors. SongXtend 2121 reduces sulphur by 60 percent, the 2122 grade reduces sulphur by 30 percent, and 2123 is sulphur-free.

Butti also used the K event to introduce the company's newest distribution partner, Italy's Sabo SpA, a privately held, $165 million firm that is the world's second-largest maker of hindered amine light stabilizers. HALS are light-stabilizing additives for polyolefins. Songwon will supply Sabo's products via its global network.

Sabo CEO Germano Peverelli told attendees that his firm doubled capacity this month for its Sabo Stab UV 119 additive, and also recently agreed to license Chimassorb 2020 technology from BASF. Sabo will commercialize Chimassorb 2020 under the brand name Sabo Stab UV 40, which is said to combine exceptionally high UV and long-term thermal stability.

Meantime, Songwon continues its aggressive push with "one-pack systems" — products that combine a variety of complex additives into an integrated, dust-free pellet form that can be custom formulated. It offered no such products as recently as 2011, but now has 14,000 metric tons of annual one-pack system (OPS) production capacity worldwide, and plans to boost that to 40,000 tonnes by 2015, Butti said.

He went on to give updates on some of the company's previously announced global investments:

• It will break ground on its new OPS plant in Abu Dhabi next month, with the aim of bringing it on stream in the third quarter of 2014. That plant involves an investment of $15 million to $20 million.

• Songwon's expansion of OPS capacity in Greiz, Germany, was implemented this past July, via the implementation of new production technology.

• Retrofitting of new improved technology will allow the firm to bring an additional 5,000 tonnes of new polymer stabilizer capacity on stream in January 2014.

• It also can add another 8,000 to 10,000 tonnes through changes to the manufacturing structure, without the addition of new capital.

• In the area of non-polymer stabilizers, Songwon also recently brought on stream, in the second half of 2013, new capacity to make diocytl tin oxide.

In a post-conference interview, Butti said that to be successful in China, "you need to be local" with a physical plant. Songwon is selling in China now and has great interest in the market, but other initiatives are taking priority.

Similarly, he said the firm has no clear plan now for expansion in South America. OPS production there "could make sense," he acknowledged, but the market there is not big enough now to justify building a full-blown chemical plant.

India, Butti said, is a different story. That market could support chemical production, but OPS demand in India now is "marginal."

Finally, he noted that there is only plant in North America producing antioxidants. He said Songwon sees that market as having potential for supporting another such plant. But it's still too early to determine that, he said, with a couple more years needed to assess demand and market conditions.