Lanxess to ease in new rubber capacity in Singapore, China

London – Lanxess 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 kilotonnes per annum (ktpa) on Jurong Island, is scheduled to come on stream in the first half of 2015. The 160ktpa EPDM plant, in Changzhou, Jiangsu Province, is also 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 Ingo Drechsler, head of Lanxess corporate communication’s external relations team.

"This means however that we have to incur idle costs this and the next year," Drechsler added In a written response to questions from ERJ.

In the longer run, though, Lanxess believes that in the long run the additional capacities for its products would be absorbed by the growing markets, the spokesman also emphasised.

Further elaborating on the demand situation in the rubber market, Drechsler highlighted that Lanxess expected its “high performance grades of rubber” to be absorbed faster than more standardised grades.

According to Lanxess, the basis for this good demand for the new grades of rubber is the underlying trend of mobility and a trend towards fuel-efficiency, which leads to substitution of general purpose (e.g. Ni-PBR) by high performance rubbers such as Nd-PBR.

Lanxess also confirmed to ERJ that the second and third phase of its restructuring, aimed at improving “operational competitiveness” were underway in parallel and involved mothballing and 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, adding: “Thus, since the middle of last year, we are working on a three-phase realignment which 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 which was the consolidation of its performance polymers segment from 5 to 3 business units.

“In the second phase, Lanxess will focus on improving its operational competitiveness… evaluating site closures and mothballings, thus directly addressing oversupply,” pointed out the spokesman.

In the third phase, the company said, it would focus on horizontal and vertical cooperations in the rubber business.