The global polymer stabilisation market will need a major capacity expansion by 2017 because of normal demand growth and new applications, said Maurizio Butti, the chief operating officer for South Korean polymer additives producer Songwon.
“If [global] economic recovery takes place and demand in polymer industry grows, we will need additional capacity in 2016-2017,” Butti told ICIS in a telephone interview from Frauenfeld, Switzerland.
The polyolefin market grows by 4-5% on average and growth in polymer stabilisation is slightly higher because of new applications, Butti said.
“Where you use polyolefins for high-end applications there is little bit more stabilisation [needed],” he explained.
He cited the growing use of polymers in automotive industry as well as recycling of polymers as new demand areas for stabilisers.
“You actually have an application under the [car] hood where polypropylene [PP] now seems to be best candidate, but it needs specific stabilisation to be able to withstand high temperatures,” he added.
Butti said Songwon is continuously working on technology “to create additional capacity” but has no immediate plans of major expansion. “Major expansion in the short term? Not.”
“We are in discussion to make an acquisition, not huge but strategically important, but unfortunately I am bound by confidentiality,” he said. “In July[or] August we should be able to announce something.”
Songwon had announced last year that it intended to make a major investment in either the US or Middle East but Butti said no final decision in this regard had been taken yet.
“We actually did not take any decision yet, but we are still looking at the same possibilities,” he said and added: “…the decision will need to be taken next year. We are not too far away from a decision.”
Earlier this month, Songwon announced its net profit for the full year of 2013 was up by 12.1% year on year at W22.9bn ($22m), but sales rose only by 1.8% to W692.1bn.
Butti said its lower-than-expected sales last year was because of several reasons including slower global economic recovery as well as lower demand along with discontinuation of four products by the company.
“One product we sold and stopped production of three other products. This affected sales. Without the discontinuations of the products… the growth was about 3%, not huge, but slightly better,” he added.
The company sold its biphenol business and discontinued production of antioxidant RD/FR and para-tertiary butylphenol (PTBP).
However, Butti expects better sales this year on the back improved demand.
“We are actually still looking at a growth of about 10% for this year. Actually, the year didn’t start as strong as we expected but now there are real signs of recovery so we believe that demand…will be better than last year.”