Orgkhim sticks to its growth plans

Nizhny Novgorod, Russia – Orgkhim’s “is mostly on schedule” with its project to build a new plant in Malaysia, with start-up expected in the fourth quarter of 2017, according to Ilya Zakharov, head of marketing at the Russian rubber processing oils supplier.

The 50-kilotonnes per annum (ktpa) unit will produce the company’s TDAE (treated distillate aromatic extract), TRAE (treated residual aromatic extract) and S-RAE (safe RAE, “green” analogue of traditional RAE) products.

The Malaysian facility will supply markets in the Asia Pacific region with a particular focus on China as well as other established markets including Malaysia and Singapore.

Asked if these markets would support full uptake from the plant, Zakharov said: “Today, we supply China and Korea and other Asian countries directly from Russia. Our volumes are growing so we will easily move production of these volumes to Malaysia.”

Reduced logistics costs, he added, “will even allow us to be more competitive.”

Zakharov described Orgkhim’s markets in Russia as “stable”: While the tire industry was impacted by a downturn in the automotive industry, the decline in the value of the Ruble was benefiting synthetic rubber makers in the country.

“We supply our oils to SBR companies, who have increased their volumes because they have become more competitive and sell more abroad. So demand from them has increased,” he explained.

Meanwhile, Orgkhim’s plans to establish a production facility in the US remain subject to on-going negotiations with several customers – likely to conclude in the second half of this year.

“The decision on whether to construct a production unit or not will be made after they agree, or not. So first we need a positive business case,” said Zakharov. “Trials are on-going, some past the lab homologation [stage] and onto the next step.”

Asked about the market for naphthenic oil, Zakharov said global demand was currently growing at a rate of 3-4 percent per year, while Orgkhim’s business was achieving higher annual growth.