India's GFL looks to fill void in FKMs

NOIDA, India—There's a hesitancy among major suppliers of fluoroelastomers to add capacity, something that could be an issue with 3M Corp.'s plan to leave the industry by the end of 2025.

That's understandable, given the regulatory environment surrounding the potential ban of PFAS materials in the European Union and elsewhere. That makes investing in FKMs and fluoropolymers a tricky proposition.

"Other suppliers, while they may have plans to increase capacity to make up for 3M leaving the market, it takes time, No. 1, to get those operations up and running," said Ryan Fleming, director of materials technology, corporate technology and innovation for Freudenberg-NOK Sealing Technology. "And No. 2, they're hesitant to invest in FKM and PTFEs and things like this. If it ends up being banned, that's a zero dollar investment right there."

But India's Gujaret Fluorochemicals Ltd. is taking the opposite approach. It's leaning into its knowledge of fluorine chemistry and history in manufacturing various lines of fluoropolymers to go all in on the production of its line of Fluonox-brand fluoroelastomers.

From jumping into the FKM market in 2017, GFL took its time to make sure its product was established but, once it was, growth came quickly as has the addition of new capacity, according to Kapil Malhotra, head of GFL's fluoropolymers business.

GFL started modestly with one manufacturing line for fluoroelastomers installed at its complex in Dahej, India. Malhotra said it took roughly 18 to 24 months to stabilize the product and begin getting market approvals for the Fluonox lines for such applications as automotive and aerospace.

That brought the Indian firm to 2019, and COVID hit in 2020. But about six months into the pandemic, the supplier started to see pent-up demand from the market start rising.

"Once we were approved by customers, demand started going up and we felt that one line was not sufficient to satisfy the market," Malhotra told Rubber News in an interview from his office in Noida.

Toward the end of 2020, GFL decided to go forward with two additional fluoroelastomer lines, which were commissioned in the first quarter of 2022. And within six weeks, the firm sold out the volume from the new capacity as demand in the market was outstripping the ability of the existing suppliers to keep up, he said, adding that his firm's experience in related areas helped as well.

"We stepped in at the right time," Malhotra said. "Suppliers couldn't meet extra demand. So customers knew with their experience in fluoropolymers that GFL is a reliable supply chain partner. Once we commit to a customer we always try to fulfill the demands of the customer. So that past also helped us to get a footing into these markets."

With that success, GFL moved forward with adding more capacity for its Fluonox FKMs. It decided sometime in the second quarter of 2022 to invest in two more lines and had that capacity up and running in this year's first quarter.

That gives the producer almost five times the amount of capacity from when it started, he said, and they don't expect the new volume to last long either. GFL is seeing some rising demand for its fluoroelastomers from what it calls new "sunrise sectors," such as electric vehicle batteries and green hydrogen. More new business will come from non-automotive applications, especially in oil and gas.

"We feel like these two lines should get absorbed in about six months," Malhotra said. "Once these lines get absorbed, then we will take further expansions, specifically in the grades where we are seeing this demand."

GFL has invested heavily in this fluoroelastomer capacity, along with its other manufacturing. Malhotra estimated it spent roughly $50 million for the first FKM lines along with some backward integration.

The materials firm also unveiled a capital spending program where it will spend about $1 billion over the next four to five years. About 30 percent of the $250 million committed for the next year will be spent on FKMs and related supply chain investments.

Its integrated facilities in Dahej house FKM production, along with other fluoropolymers such as PTFE, PFA, FEP, PVDF and fluoropolymer additives.

With its background in fluorine chemistry, Malhotra said GFL tends to include backward integration so it can control the entire production of lines from raw material to finished grade when sensible. That includes adding production for refrigerant R142B, which is a key ingredient in FKMs. The material was in short supply as demand from plastics was taking much of the available volume from the market, so GFL invested in its own capability to ensure an adequate supply.

About 80-90 percent of its FKM business has come from new customers, while the remainder were previous customers GFL supplied other fluoropolymers. Most challenges with starting from scratch were worked out with the first line. The process has gone smoother from there as customers began to sample the elastomers and GFL worked to get evaluations and approvals.

Malhotra expects the 3M exit to give his firm even more opportunities for growth. The first stage will involve transitioning existing grades already approved by customers.

The second, more difficult stage is developing new grades for 3M lines. "Once (customers) evaluate and approve us, and once 3M starts exiting those grades, we will start getting markets for those as well," Malhotra said.

GFL also worked early on to develop a manufacturing process where it could eliminate the use of fluorinated polymerization aids. Those fluorinated surfactants have been one of the key focuses of the efforts to regulate and potentially ban PFAS materials.

GFL in March 2022 put in use a non-fluorinated aid for its PTFE production process. It followed that in August of last year with the elimination of such aids in its manufacture of FKM terpolymers, which previously needed the PFAS chemicals.

"GFL believes that we had to somehow find the cure from the beginning, rather than trying to go for abatement of those products which are emitting PFAS," Malhotra said. "So we have developed an FKM in terpolymer processing without the use of any surfactant. That is something which is a good achievement of GFL's technical and R&D team. ... That gives us a benefit in terms of promoting our product, which we feel is what the market desires and what the (European Chemicals Agency) is hinting at."

The supplier expects strong growth in its home market of India, but is looking to gain increasing sales in areas such as North America, Europe and Japan.

Malhotra said 15 percent of current sales come from North America, and plans are for that to grow to 35 percent.

Industry veteran Brian Barkes was brought on in 2017 as director of sales and marketing for GFL Americas L.L.C. to help build GFL's presence in North America for fluoroelastomers. He helped build the groundwork in the continent, and in 2021 reached an agreement with Harwick Standard Distribution Corp. to market and sell GFL lines in areas Barkes can't cover.

Barkes, though, said GFL had to initially hold off in having Harwick go full bore because of turmoil in the market related to lack of product because of the R142B refrigerant shortage and GFL not yet having its expansion in place.

"Up until then, there was not a lot of growth because of the shortages in the marketplace," he said. "We've now since turned the corner and I've cut these guys loose to sell whatever they can sell."

Malhotra said he personally will devote much time with Barkes and his team to focus on growth in North America and to have GFL seen as a preferred supplier. He met most of the FKM customers during the ACS Rubber Division International Elastomer Conference last fall, then visited U.S. customers this past February for two weeks.

"I wanted to assure them of the consistent quality, supply chain and service we will provide," he said. "That's what they want to hear from the management of GFL, that they should have a long-term, consistent sustainable supply chain in FKM, that their business can grow."

Elsewhere, he said GFL sells about 25 percent of its fluoroelastomers in India and 20 percent in the European Union. It also has made inroads in Japan, which is a quality conscious market, and even is selling some value-added grades in China.