Eyeing a growing U.S. silicone market, Wacker Chemie AG is putting its money where the demand is.
After announcements earlier this year of LSR capacity expansions in Adrian, Mich., and Burghausen, Germany, the Ann Arbor, Mich.-based U.S. subsidiary Wacker Chemical Corp. is undertaking a feasibility study into a $200 million HCR capacity expansion in the Tennessee Valley.
Pushing the study is strong U.S. demand for customized and highly specialized silicone products, Wacker said.
No official decision has been made on an expansion at the location.
"To support and intensify this demand, we've planned capacity expansions in several regions and markets where our customers operate," David Wilhoit, president of Wacker Chemical Corp., told Rubber News. "In the U.S., demand for silicones has shown above-average growth in recent years. With this comprehensive investment under investigation, we have the possibility to further expand our position in the world's second-largest chemical market."
The Charleston, Tenn., location already produces fumed silica (HDK brand, a filler and anti-caking agent) for captive use and sale, as well as high-purity polysilicon (highly-refined silicon metal from quartzite) for the solar and semiconductor industries.
With an expansion, the 550-acre site will see increased production of high-consistency silicone rubber and silicone sealants for construction applications.
Fumed, or pyrogenic, silica capacity expansion plans are not a focus of the feasibility study.
Plants for intermediates also are being analyzed at the site in later phases as Wacker looks to vertically integrate operations.
"In further phases, production plants for other product groups could then be added for silane-terminated polymers," Wilhoit said.
While the scope of the feasibility study — a timeline for its completion was not known—does not include upstream raw materials such as siloxane, a monomer that only is produced by Dow in North America, Wacker said that could change in the years to come.
"Wacker does have the vision to eventually create a fully integrated production site which could include the upstream products such as siloxane and other intermediates in the long term," Wilhoit said.
A total capacity HCR increase at the Charleston site was not yet known, nor was a square footage for the expansion.
"Production capacity is one of the key metrics under investigation in the feasibility study and therefore under consideration," Wilhoit said. "We will disclose details as soon as the investment has been approved."
An expansion at the site would bring about 200 jobs in technical and chemical positions to operate the facility, such as operators, chemists, chemical engineers, and operations management, Wilhoit said.
The U.S. silicone market, according to market analyst Grand View Research Inc., is seeing strong growth at 4.3 percent CAGR through 2028 (about $14.4 billion in the U.S. in 2021).
Driving demand are the automotive, construction, medical, cosmetics, electronics and foodstuff industries.
"This business is of strategic importance to us," Wacker Chemie CEO Christian Hartel said in a statement announcing the Tennessee study. "Demand for high-performance specialty silicones is showing particularly strong growth. Such specialties enable innovative, tailor-made solutions in key industries such as automotive, construction, electronics and medical technology.
"By expanding our capacities, we aim to support our customers to the best of our ability."
Globally, Wacker has announced more than $400 million in capital investments per year between 2022 and 2030 in its specialty chemicals divisions — and more than $100 million of that is in HCR and LSR capacity expansions.
In measures taken over the last year alone, Wacker has pushed to vertically integrate its operations, expanding its upstream refined silicon metal production in Norway.
And Wacker Chemie is estimating sales of more than $10.1 billion by 2030, with an EBITDA of more than 20 percent.
The global silicone market is expected to crest $28 billion by 2030, according to Grand View Research.
With record sales in 2021 despite raw material pricing volatility and supply chain challenges, Wacker Silicones has mimicked its global parent company on its growth trajectory.
In the last year, Wacker has invested more than $107.3 million in expanded capacity projects for HCR and LSR at facilities around the globe, including sites in the Czech Republic, Japan, China and India.
"Wacker will gradually increase its capacities for HCR and LSR grades significantly in the next few years," Christian Gimber, vice president of engineering silicones at Wacker Silicones, told Rubber News. "Regarding LSR, Wacker expects additional capacities in the second half of this year due to several capacity expansions."
Gimber cited the aforementioned LSR production capacity increases in Burghausen, Germany, which will be complete at the end of the year.
New capacities will be available for the North and Central American markets from next year onward, Gimber said.
Outside of Charleston, "substantial capacity" expansions also are planned for HCR.
A production site in Panagarh, India, has just been inaugurated and "will start production shortly," Gimber said.
The Panagarh expansion, announced July 5, is three times the size of another Wacker production plant that sits about 100 miles to the southeast of Panagarh in Amtala, near Kolkata.
Additional HCR capacities will be available early next year at Wacker sites in the Czech Republic (Pilzen) and in Japan (Tsukuba).
"In the long term, Wacker is also considering expansion measures at its sites in Zhangjiagang (China) and in Burghausen (Germany, for HCR)," Gimber said.
On the research and development side, Wacker recently announced a multi-million dollar biotechnology center to be built in Munich for 90 research engineers. It is set to open in 2024 and focus on biopharmaceuticals and advanced medicines.
And in late May, the company opened the doors to a new 140,000-sq.-ft., $50 million innovation center in Ann Arbor, Mich.
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