LONDON—Lanxess A.G. has confirmed that both its neodymium polybutadiene rubber (Nd-PBR) plant in Singapore as well as the EPDM plant in China will be ramped up this year but will not run at full capacity for the time being to avoid further pressure on the supply-demand balance.
The Singapore Nd-PBR plant, with a total capacity of 140 kilotons per year on Jurong Island, is scheduled to come on stream in the first half of 2015. The 160-kilotons-per-year EPDM plant, in Changzhou, Jiangsu Province, is expected to start up this year.
“Lanxess decided not to push the full capacity in the market at once but will rather gradually move these capacities into the markets,” said a Lanxess spokesman. “This means however that we have to incur idle costs this and the next year.”
Lanxess believes that in the long run the additional capacities for its products would be absorbed by the growing markets, the spokesman emphasized.
The spokesman said Lanxess expected its “high performance grades of rubber” to be absorbed faster than more standardized grades.
According to Lanxess, the basis for this positive demand for new grades of rubber is the underlying trend of mobility and a trend toward fuel-efficiency, which leads to substitution of general purpose (e.g. Ni-PBR) by high performance rubbers such as Nd-PBR.
Lanxess confirmed that the second and third phase of its restructuring, aimed at improving “operational competitiveness” were under way in parallel and involved temporarily or permanently closing a number of its plants.
“What concerns us are existing overcapacities and how the market will react to those over time,” said the spokesman. “Thus, since the middle of last year, we are working on a three-phase realignment that also includes the structural re-positioning of the rubber business.”
In the first phase, which concluded in November 2014, the company reduced the number of business units, among was the consolidation of its performance polymers segment from five to three business units.
“In the second phase, Lanxess will focus on improving its operational competitiveness … evaluating site closures and thus directly addressing oversupply,” the spokesman said.
In the third phase, the company said it would focus on horizontal and vertical co-operations in the rubber business.