Zeon expanding HNBR production to meet surging demand

PASADENA, Texas—When stars align just so, demand for certain products skyrockets.

Zeon Corp. is watching the markets it serves, and it's starting to see a few of those stars slip into place, indicating that it's time to grow just a little bit more.

It's time to invest and meet growing demand for HNBR.

And this time, the company is growing in the Lone Star State.

The specialty elastomer, polymers and chemical maker said late last year that it would expand HNBR production at its Pasadena, Texas, facility. It is a move that will help it grow global HNBR production capacity by 25 percent.

The investment is being made through Zeon's U.S.-based subsidiary Zeon Chemicals L.P.

And it's exactly the kind of expansion Zeon was ready for.

"We have a large plant footprint as part of our existing facility that is undeveloped," Brian Cail, vice president of sales and marketing for Zeon Corp., told Rubber News. "… It is land that, when Zeon first built the facility in the very late 1980s, it was kind of forward-looking to say the Houston area has a lot of benefit in terms of proximity to other chemical assets, great labor force availability, as well as (being) favorable on utilities and other things. It is really just taking advantage of land already in place."

The company did not disclose the investment amount, but Cail noted that it was in the tens of millions of dollars.

Construction on the expansion is set to begin in the first half of 2023, and Zeon expects the newly expanded lines to fully come onstream early in 2025.

This also marks the second HNBR capacity expansion at the Pasadena plant in the last three years. Zeon said it added capacity at the Texas facility in 2020.

And while the investment in the Texas plant expansion is a big part of Zeon's plans to grow HNBR capacity globally, it's not the only step forward the company is taking.

Zeon operates two HNBR plants worldwide—in Texas and Takaoka City, Japan. Early in 2022, Zeon brought some additional HNBR capacity online at its Japanese facility. It was an effort Cail credited to debottlenecking, rather than a capacity addition.

Both the U.S. and Japan sites serve customers around the globe, but Cail noted that they tend to operate on more of a regional basis.

"There is a redundancy in the grades that are produced in Japan and produced in Texas, (but there are) a few more specialty grades that are localized at one of the given factories," Cail said. "Typically the factories are supplying their local markets.

"For us, the Texas plant is mostly supplying the Americas as well as Europe. The factory in Japan supplies the Asian market predominately. That is not exclusively, but a vast percentage."

There's good reason for the HNBR investment timing.

Simply, demand is surging. And that's especially true for demand in the Americas and Europe—regions that the Texas facility primarily serves.

One of the main drivers behind the surging demand is the growth of the electric vehicle market. It's a segment of the automotive industry where HNBR application has some of the greatest potential for growth. Because the material—traditionally used in under-hood applications, timing belts, engine sealing and hoses—shows a toughness and durability that is needed as new mobility emerges.

And it's the material's excellent chemical and heat resistance that's catching the eyes of customers, Cail said.

"We are seeing very good performance of HNBR in battery electric car applications," Cail said. "Some of the new fluids used on those vehicles are particularly aggressive, and HNBR has excellent resistance to the new emersion fluids, especially dielectric fluids in particular. A lot of people don't think of electric cars having fluids, but there is, actually, a fair bit in there from cooling systems as well lubrications."

With the emergence of the electrified motor parc comes a surge in demand for lithium-ion batteries.

It's the kind of demand that is super-charging battery manufacturing efforts globally. Markets and Markets estimates, for instance, that the global lithium-ion battery market will grow more than 2.5 times to $135.1 billion by 2031 with a CAGR of around 13.1 percent.

For Zeon, particularly, the potential for growth also lies within the lithium-ion battery itself, where there are additional applications for HNBR.

"Another reason why we are expanding is the use of HNBR in lithium-ion batteries," Cail said. "That is a fast-growing area for Zeon. One of the uses of HNBR is inside the lithium-ion cell itself and that is certainly—with the growth of lithium-ion batteries being built globally, but more importantly in the U.S. and Europe—a trigger point for us having capacity available for that."

But it's not just the surging new mobility market that is encouraging Zeon to step up its HNBR capacity. Demand for HNBR is growing in other key markets as well. Oil and gas, for instance.

"The reason for the investment is a long return on the business," Cail said. "We see continued adoption of HNBR in oil and gas operations and we expect that market to continue, especially domestically with more oil production in the U.S. as opposed to imported oil."

And it is this surging demand across several key end markets that is really pushing the timing of the Texas HNBR expansion.

So much so that the company is investing in capacity expansion sooner than it expected.

"The market demand is running very strong in that product line and it's causing us to accelerate plans for expansion," Cail said. "Really this is the continuance of investment innovation in the HNBR business by Zeon

"… We are seeing very strong continued demand for HNBR, both in conventional applications and some in the electrified area, and that is really driving us to put in that expansion faster than our plans were originally."