Istanbul — Materials supplier A. Schulman Inc. is expanding capacity in the Middle East with a large polypropylene compounding plant, in a joint venture with Saudi resin maker National Petrochemical Industrial Co.
In a Dec. 3 announcement, the company said the new facility, in Yanbu, Saudi Arabia, will have capacity of 220 million pounds a year. It will be located next to an existing 880 million pound PP resin manufacturing plant operated by Natpet, which will supply the material for compounding.
The U.S. firm seems increasingly interested in the region, and said the 50/50 joint venture with Natpet will let it better supply customers in Europe, the Middle East, Asia, Africa and India.
Fairlawn, Ohio-based Schulman announced earlier this year it was building a smaller masterbatch facility in Turkey, and in a Dec. 3 interview at a trade fair in Istanbul, an executive said the company may follow that with an engineering plastics compounding plant in Turkey.
Horst Klink, vice president of engineering plastics for Europe, the Middle East and Africa, said the majority of Yanbu's production would be targeted outside the immediate Persian Gulf region.
He said Natpet's PP resin plant uses LyondellBasell's Spheripol technology, and provides the joint venture with compounding capacity to enter large volume markets.
“It puts us in a position to compete with the big producers, as if we're backward integrated, which we are as a JV,” he said in at the PlastEurasia show in Istanbul. “We are also in a position to offer large volumes. So far we have been a niche player, in niche applications.”
The company said it is seeing increased demand from durable goods, automotive and electronics markets in the Middle East, Africa and India.
The joint venture plant will make the company's line of Polyfort and Polyflam flame retardant compounds, along with other materials, Klink said.
“We are expanding our product portfolio and expanding our product reach,” he said.
Schulman still sees long-term growth in places like Turkey, even with global economic uncertainty, wars and the refugee crisis cutting the plastics industry's growth there from 8 percent to about 3.5 percent this year, said Ekin Kurt, A. Schulman's general manager for Turkey.
In explaining Schulman's focus on the region, Klink said that Turkey's plastics processing industry is now the second largest in Europe, trailing Germany but ahead of Italy, and that many of the fundamental drivers of growth there remain.
He also Schulman is starting to get customer requests from what are newer markets for the firm, like Nigeria, and the Yanbu plant would better position them for that.
“We have customers who want us to be represented in Nigeria,” he said, before adding that it's “very early stage” and is “probably a market for tomorrow.”
Natpet said in the announcement that it sees the Yanbu plant as also providing a boost to local downstream processing industries.
“It is a crucial enabler of creating further downstream projects by provision of key ingredients to manufacture auto and appliance components,” said Helmi Kutbi, president, downstream for Natpet.