TWINSBURG, Ohio—The supply situation for chlorinated polyethylene elastomers may get tight later this year because of ongoing issues in China.
Twinsburg-based Lianda Corp., the top U.S. provider for CPE used in the rubber industry, said despite the fact its main supplier had to shut down its prior operation before its replacement facility was built, it stocked up on enough inventory to meet customer needs.
A competitor that has been trying to make inroads in the U.S. market for the past several years questions whether Lianda has enough material to supply the market before the new plant in China is brought online and new materials can be qualified.
At the very least, customers need to be proactive and qualify a second source to ensure security of supply, according to Douglas Li, marketing manager for Verona, N.J.,-based Industech International Inc, which imports CPE from another Chinese chemical firm.
"They don't realize this is an urgent situation for them," said Li, noting that some major customers take six months or more to qualify new materials. "It's common sense. If they don't work quickly on additional sourcing they will pay the price for the industry."
Lianda has been in constant communication both with its CPE supplier and its customers, and said it is confident that it has enough supply on hand to meet requirements, said Chad Atzemis, Lianda's chief operating officer.
"With recent (COVID-related) shutdowns, we may actually have a little bit more of an insulation of inventory in the U.S., and we're working with our customers every day to make sure we understand their needs so that we can keep them fully supplied," he said. "And so far, we don't see any problems.
Lianda is celebrating its 25th anniversary this year, and CPE was its first product, supplied by China's Weifang Yaxing Chemical Co. Ltd. Atzemis said Shawn Xu, one of Lianda's founders, was a polymer chemist and worked closely with the Chinese firm to develop the grades that were needed for the North American market.
"After some other CPE products left the market (including Dow), Yaxing stepped up and with Lianda's technical support helped reconfigure its product line and some of its manufacturing processes to be able to be the premier supplier to the rubber industry supplying grades that are not available anywhere else."
Lianda remains the exclusive distributor in North America for Yaxing's Welpren-brand CPE products.
For the rubber industry, wire and cable insulation and jackets, along with high performance hose and tubing, are by far the largest volume users of CPE elastomers, although CPE also finds applications in sponge, gaskets and molded goods.
Chlorinated polyethylene also is used in thermoplastic applications, including wire and cable jackets, rigid foam, molded goods, sheet and films, fabric coatings and adhesive seals. And CPE has a third major use, as an impact modifier for rigid vinyl products such as vinyl siding, fence, pipe and window profiles.
Atzemis said there are roughly 20 different grades of CPE used that vary in properties such as chlorine content, viscosity, heat of fusion and other specialty specifications.
"Globally, (thermoplastics) may be actually a higher volume, but for the North American market the rubber grades tend to be the more difficult to manufacture, more difficult to find grades," he said.
And by holding the position as the No. 1 supplier of these CPE materials to North America, Lianda needed to make sure it was in a position to meet customer needs once news came down that Yaxing would have to move its production facility much earlier than normal. There had been a three- to five-year plan in place, Atzemis said, for the Chinese chemical company to relocate its factory outside the city of Weifang because of many factors. That included the China Blue Sky Initiative, where the government was trying to clean up cities from a pollution and environmental standpoint.
Yaxing had expanded and relocated over the years, so Lianda was well-experienced in dealing with such supply changes from its CPE supplier. But last year the timeline changed drastically, Atzemis said, because there had been multiple chemical plant explosions in China during 2018-19, none of which involved Yaxing. Regional authorities for the city and Shandong Province dictated that the Yaxing facility had to close last Oct. 31.
"They were given roughly 60 days to shut down," he said. "The good news is at that time, Lianda jumped into action, did a survey of all their major customer volume-wise, and talked with leaders of Yaxing, the local and regional authorities, and the trade authorities in China. We basically bought out the 60 days of production and brought in about 1 1/2 years of inventory."
Since Nov. 1, Lianda has been working off that inventory at its U.S. distribution locations. Atzemis said Lianda wanted that much inventory to give Yaxing time to rebuild its facility at a different location, do the scale-up and relaunch, and get required customer qualifications of material from the new site.
The new plant is in the same region, located in the same province about 45 kilometers outside the city in a fully improved industrial park where the utilities already were run to the plot, according to Atzemis. Plans are to have capacity to produce 150,000 metric tons a year for CPE, with 50,000 tons available when the first phase is completed later this year and the rest from the second and third phases, projected for early 2021.
He said construction is on schedule, having visited the site a couple of times, but now has been receiving photo updates because of travel restrictions enacted due to the coronavirus pandemic.