Kraton Polymers LLC of Houston announced expansion plans in Asia, including a 66 million-pound-per-year hydrogenated styrenic block copolymer manufacturing plant and a Chinese customer service center with research and development functions.
The Kraton G plant, the company's first in Asia, probably will be located in China. Chief Executive Officer and President George Gregory and Asia and Pacific operations Vice President Michael Evans said in an April 25 interview in Shanghai that they had visited ``half a dozen'' sites in China, including Suzhou and Nantong. Key criteria for the site include good access to raw materials, proximity to customers, good logistics and good economics.
The company said it has initiated engineering plans for the plant and is in discussions with several potential partners. The plant engineering and site search will be finished in 12 months. Evans also said: ``Kraton is considering [joint venture] options but is not dedicated to finding a JV partner.''
The Chinese market for SBCs is seeing lots of new capacity, according to New Zealand-based Roger Young, Asia-Pacific vice president for Akron, Ohio-based consulting firm Robert Eller Associates Inc. China is shifting from an export market for SBCs to domestic production, he said.
Gregory said the annual growth rate in China for hydrogenated SBCs will be higher than 9 percent.
Kraton makes several SBCs - Kraton G, for example, has a hydrogenated midblock. Gregory said the company will be ``out of G capacity globally by 2009'' but has sufficient capacity for its other products.
The company may consider a Kraton styrene butadiene styrene plant in Asia, he added. Right now, Kraton has a joint venture in Japan that helps serve the regional SBS market.
The new G product plant will serve all of Asia and, in some cases, the global market. It will be valuable in strengthening the company's global coverage and flexibility, he said. The new plant will be Kraton's third G plant; the other two are in Belpre, Ohio, and Berre, France.
Kraton currently claims 30 percent of the $3 billion global SBC market. But Gregory said the leadership position does not hold true in China, the company's fastest-growing market. He said footware, the largest SBC segment in China, is not a core market for Kraton.
In recent years, Gregory said, the global SBC market has been growing at 8 percent, Asia 12 percent, and China 13-14 percent.
``As we look forward, we'll see [the market] globally growing around 6 percent, Asia growing 6-7 percent, and China growing faster, except it has a large footware area, which we've seen moderate growth rate,'' he said.
The customer service center, to open in the first quarter of 2007 in eastern China, will include a distribution center and technical product support for customers in the region. Evans has operated the Shanghai office since June. The center also will be doing limited research and development, Gregory said.
Kraton reported a record $954 million in 2005 sales, a year after being hit by ``unprecedented price increases of raw materials'' that led the company to focus heavily on ``improving the overall financial standings in 2004 and 2005.''
With a global workforce of 890, it currently operates six plants, in Belpre; Pernis, the Netherlands; Wesseling, Germany; Berre; Paulinia, Brazil; and Kashima, Japan, as well as research and development centers in the United States, Belgium, the Netherlands, Brazil and Japan.
The company, which made 780 million pounds of material in 2005, will open a 3.3 million- pound plant in Brazil by the end of this year to produce materials used in surgical drapes and the like.
``That will double our capacity in that business,'' Gregory said.
Asia represents 14 percent of Kraton's total sales.
China is Kraton's second-largest market in the region, with a 6 percent share of global sales, followed by Japan, which accounts for a little less than half of Asian sales. In addition to the plant and R&D center in Japan, Kraton's Asia-Pacific operations also include sales offices in China, Hong Kong, Taiwan, Japan, India and Australia.
Currently, Kraton has nine distributors in China.
The company also introduced two new grades of its G SBCs for film applications.