Cariflex expansion to double IR latex capacity

SINGAPORE—Cariflex PTE Ltd., a producer of isoprene rubber and polyisoprene rubber latex, will invest $50 million in an expansion of its Paulinia, Brazil, plant, allowing the company to double its production capacity of IR latex in response to global demand.

The facility will be built from the ground up next to Cariflex's existing Paulinia facilities and is expected to be operational by the first quarter of 2021, said Philippe Henderson, sales and marketing leader at Cariflex. The increased capacity at the South American plant will combine with capacity already online at a Cariflex facility in Himeji, Japan, Cariflex said.

Used in dipped goods and specialty medical products such as surgical gloves, condoms and other applications, polyisoprene latex can be a synthetic alternative to natural rubber latex. Cariflex also manufactures isoprene rubber and offers the solid elastomer in 50-pound bales for use in medical stoppers, discs and other rubber pieces.

"With the current strong demand for medical protective equipment such as surgical gloves, we recognize our customers' need to have more material available," Henderson said. "We wouldn't put $50 million in the ground in Brazil if we had no confidence in growth."

Henderson noted that while the polyisoprene rubber latex market has accelerated in both the U.S. and abroad due to the coronavirus pandemic, IR latex boasts another medical advantage that keeps demand high: its hypoallergenic virtues as a synthetic product.

"The market outside the U.S. is really untapped and there is tremendous potential for growth there," Henderson said.

A hypoallergenic option

Right now, polyisoprene rubber latex surgical gloves—much different in protection, sensitivity and fit than examination or other types of polymer-based gloves—usually end up in the U.S., as the country was the first to adopt medical gloves that prevent Type 1 (anaphylactic) allergies.

This is one of the inherent virtues of polyisoprene rubber, Henderson said, because the synthetic version uses a molecule that is similar to that which is found in natural rubber—but does not contain any of the impurities of NR (namely one type of protein that is produced)—that can be absorbed through the skin.

Cariflex's mainstream line of polyisoprene latex, Cariflex IR0401, which will see its capacity enhanced at the Brazilian plant, saw its first tonnage of sales in 2001, through gloves and products that addressed Type I allergies.

"The reason natural rubber has been a fantastic product for decades is because it is strong and offers mechanical protection that many goods need to have, including condoms and surgical gloves," Henderson said. "These products need good sensitivity. Surgeons need to feel the instrument, and sensitivity is essential—and this comes from elasticity, which NR has."

The Achilles heel for natural rubber in medical and consumer applications is allergies, potentially causing either Type I or Type IV (hypersensitivity) allergic reactions.

"Allergies are a big issue for NR," he said. "You solve that with polyisoprene, which contains more or less the same molecule as NR, and you eliminate the Type I allergy. It's very difficult to find polymers that give the same fit and feel, as well. Using nitrile or chloroprene for examination gloves, the fit and feel are not same as is required in surgical gloves.

"This is why we have been successful in the past years to get where we are."

Cariflex has not been complacent in the hypoallergenic research and development space, either, as the company also offers Cariflex IR2GL1 latex, a "second generation," innovative thermoplastic latex potentially offering the same fit, feel and protection as Cariflex IR0401—and offering prevention of Type IV allergies as well.

Type IV allergies are not linked to the polymer (like Type I allergies) but rather to the chemicals used in the vulcanization process. And curing by way of heat rather than vulcanization "solves both Type I and Type IV allergies," Henderson said.

"This latex is based on a new polymer structure that has been specifically designed for dipped goods such as gloves and condoms. We are commercializing a second-generation latex," he said. "But like any truly new material, I will not be surprised if we find other markets where this product will add value."

Cariflex's two synthetic latex lines are produced using a secondary emulsion process, where the polyisoprene rubber is made first and the latex is produced through a secondary emulsification. Polyurethane emulsions and epoxies are made this way as well, Henderson said.

"Products made with polyisoprene latex become de facto specialty products," Henderson said. "If you cannot add value for a customer with this product, you have no markets."

'Insulated' from pandemic effects

While there was some "panic buying" initially from hospitals and consumer goods customers toward the beginning of the pandemic, particularly in the U.S. and then in Europe, Cariflex has seen the market level itself as demand for IR latex continues to be high.

"There was some panic buying as hospitals bought more to build up their inventories," Henderson said. "Maybe they feared supply chain disruptions?"

With COVID, elective surgeries decreased. Full surgeries that were not emergencies were postponed, and hospitals had no capacity to handle them anyway.

"Hospitals were in bad financial shape as well, as they get their revenue from elective surgeries—not from treating COVID-19," he said. "When I speak about our markets, I speak about surgical gloves. Examination gloves are obviously a different category of gloves, and COVID creates super high demand for such gloves. However, these are very cheap products, very different than surgical gloves."

Fortunately for Cariflex, the business did not realize any major fluctuation in its markets after an initial spike, as many customers have a defined capacity they need to keep on hand.

"This is the type of curve we see in the marketplace," Henderson said. "We don't feel too much of the variations. We have been insulated."

Kolluri to lead expansion effort

To lead the expansion and Cariflex PTE Ltd., parent company Daelim Industrial Co. Ltd., of South Korea, named Prakash Kolluri as CEO.

"Our strategic decision for the capacity expansion will accelerate organic growth to a rate faster than competitors and deliver on commitments," Kolluri said. "We believe in making our customers more powerful."

Sean Kim, CEO of Daelim Industrial, said he is happy to have Kolluri in the leadership post.

"We are confident Prakash will move Cariflex PTE Ltd. forward and bring a wealth of experience, which will be extremely valuable in driving our future growth globally," Kim said.

Daelim Industrial is part of the Daelim Group, which exists mainly in the petrochemical and engineering and construction spaces. Daelim Group saw $8.5 billion in sales in 2019. It closed on the $530 million purchase of the Cariflex business from Kraton Corp. earlier this year.

Henderson said Daelim Industrial's "key core competence is in the construction of chemical plants."

"That is going to be a serious help for us—we are a fast growing business," he said. "We keep having to add capacity every few years at a fast pace. We do expect Daelim will be a good synergy for us."