Brazil automotive downturn impacts Lanxess operations

Hanover, Germany – Lanxess is particularly concerned about its business in Brazil as a result of a global slowdown, while it remains positive about the market in China, according to a senior Lanxess official.

“In Brazil the market is really bad [and] we have seen a significant downturn in car production. That has of course had a very negative impact on the tire production and as a result on us as a key rubber supplier to the industry,” Lueckgen said in an interview at the Tire Technology Expo in Hanover.

In response, the German rubber manufacturer has cut emulsion styrene butadiene rubber (ESBR) production capacity from 190 kilotonne per annum (kpta) to 80 ktpa at its site in Duque de Caxias, Brazil.

The reduction included the closure of two reactors and four drying/finishing lines at the plant, said Lueckgen, adding that another Brazilian site, Triunfo, now mainly produces ESBR in the country.

The Lanxess official was more upbeat about the Chinese market, saying: “everybody talks about the downturn in China but when I look at the numbers, the market is still growing. It is not double-digit any more, but it is growing at around 5 percent.

“When I look at the demographics I have good reasons to believe that the growth rate will remain around that level,” he said.

One of the key additions to Lanxess’ tire rubber production in the Asia region, is its Singapore neodymium butadiene rubber (Nd-BR) plant, which started production in February 2015.

While many of the customers are still sampling the product, others “are faster and let’s say we have a substantial business at the plant,” the Lanxess boss said.

“They are mainly our Asian customers, many of whom were supplied from our European plants previously and have now switched to Singapore,” said Lueckgen.

Asked about the Lanxess and Saudi Aramco rubber JV, Arlanxeo, to be launched on 1 April Lueckgen described it as “an opportunity for Lanxess to have backward integration while giving Saudi Aramco a chance to be more involved in downstream projects.”

Article published in the March/April issue of ERJ