Cologne, Germany – The joint venture between Lanxess and Saudi Aramco will not enjoy the benefits of feedstock integration – or favourable trading conditions – for some time, Lanxess CEO Matthias Zachert has signalled.
Lanxess has binding feedstock contracts with other parties, which it has to stick to for the next two or three years. Zachert explained in answer to questions about the JV agreement, during a 5 Nov press conference.
“Then we will gradually integrate with the feedstock network of Saudi Aramco,” he told journalists the German group’s HQ in Cologne.
“For the next couple of years you should expect less, but then we will move forward with value chain integration, the value chain will be closed and our competitiveness will be improved,” Zachert added.
Meanwhile, challenges still lie ahead for Lanxesss’ rubber business, despite annual savings, worth around €450 million, being delivered from capacity reductions and other efficiency measures to 2019.
“We expect the market to continue with over capacities and price erosion, and will not be balanced out until 2019,” said Zachert. “We will have highly volatile markets until then.
Lanxess will then see if further savings measures are needed, said Zachert, who went on to forecast that the supply/demand balance would lead to a major shake-out of suppliers in the synthetic rubber market.