Elenac SA, a European joint venture between BASF AG and Shell Chemical Co., plans to boost its presence in the North American polyethylene market by opening a sales office in Southgate, Mich., and by increasing the amount of material it imports from its European plants.
The North American unit, to be called Elenac Inc., will market PE to customers in the United States, Canada and Mexico. Elenac, with 4.4 billion pounds of annual capacity at 10 sites in Western Europe, ranks second behind Borealis NV in European PE capacity, controlling about 15 percent of the market.
Strasbourg, France-based Elenac employs 3,100 and posted sales of $2.2 billion in 1999.
Chevron Chemical Co. has been toll-producing high density PE for BASF in Orange, Texas, since 1993, with BASF marketing the material primarily to automotive applications from its Wyandotte, Mich., office. Forming a separate entity in Southgate will allow Elenac, which was formed in 1998, to forge a more clear identity for its customers to relate to, according to Elenac Inc. President Michael Klamm.
With the new sales presence and an increase in exports — particularly in low density PE aimed at pharmaceutical markets — Klamm expects Elenac's North American sales to climb 50 percent in 1999.
``Making the move was necessary for our corporate identity,'' Klamm said. ``We can't sell to [original equipment manufacturers] who require global suppliers and say, `In Europe, you're buying from Elenac, but in North America, you're buying from BASF.'''
More than half of Elenac's current North American sales are of HDPE used in automotive fuel tanks, but Klamm said the company plans to increase its focus on nonautomotive uses such as large containers.
Recent demand growth has spurred Elenac's optimism in both European and North American PE markets in spite of severe price drops in 1998, Klamm said.