SHANGHAI (April 23, 2:40 p.m. ET) — South Korean plastics additives maker Songwon Industrial Group is in the advanced planning stages for putting its first plant in the United States, while it also is doubling production capacity in Germany, stepping up its activity in the Middle East and retooling its strategy in Asia, according to a senior company official.
Philippe Schlaepfer, executive vice president of corporate development, outlined the recent moves and evolving strategy in an April 20 interview at Chinaplas 2012 in Shanghai.
Songwon continues to invest much of its efforts into what it calls One Pack Systems – products that combine a wide variety of complex additives into an integrated, dust-free pellet form that can be custom formulated. The firm says these OPS products offer excellent uniformity and certified composition, while more-accurate feeding also can save money by reducing the actual dosage of individual additives.
Schlaepfer revealed, for the first time publicly, that Songwon has “pretty advanced plans” to put a one-pack production facility in the United States – most likely in Houston, near its U.S. headquarters and major customer base of polyolefin producers. The likely 5,000-square-meter site would be ready by mid-2013, and include manufacturing and warehousing. Such OPS production sites typically involve investment of $15 million to $20 million, he said.
The Ulsan, South Korea-based firm also announced at Chinaplas that it is doubling annual OPS production capacity – to 14,000 metric tons – at the plant it acquired via the purchase in December of Germany's Additives Technology Greiz. At the time of the deal, Songwon Chairman and CEO Jongho Park committed to add 5,000 metric tons of capacity to make its Songnox High Heat OPS range of products that are finding use in harsh applications in the automotive industry. But now, just four months later, the firm already is expanding those plans to allow for even more output.
“Demand is very healthy,” said Schlaepfer, who noted that the German plant also is supplying customers in the Middle East. In that region, he said, Songwon signed has memoranda of understanding with partners to build OPS manufacturing sites in both Bahrain and Abu Dhabi.
In Bahrain, Songwon already has acquired the land and currently is doing the engineering work on the site, which should be operational by the second quarter of 2013. The Abu Dhabi facility should be ready by late 2014 or early 2015, he said. Both plants will source their raw materials from Korea.
Songwon has formed a Swiss holding company – Songwon Additive Technology AG – that owns all of the German ATG firm, and which is the partner in the Middle Eastern ventures. The other equity partners in those ventures are Saudi Arabia's Pan Gulf and Abu Dhabi's Polysys Corp., Schlaepfer said.
Meantime, some of Songwon's previously announced moves in Asia are not coming to fruition. One of its planned Chinese joint ventures did not happen, which Schlaepfer said prompted the firm to put on hold plans for an analytical laboratory in Shanghai that it originally expected to have opened by now.
And efforts to complete an Indian joint venture called Songwon HPL Additives Pvt. Ltd., designed to make polymer stabilizers and OPS products in Dudhola, near New Delhi, have stalled. More news on this venture – which was unveiled with some fanfare at the K 2010 trade show in Germany – is expected shortly.
Full financial results for 2011 are due out shortly for the publicly held Songwon, now the world's second largest maker of polymer additives. It trails only Germany's BASF SE, which owns Swiss additives giant Ciba Holding AG. It's expected that Songwon will announce that its global sales last year exceeded 600 billion Korean won (more than $526 million) – up from about 550 billion won in 2010.