Q&A: Denka tracks elastomer business trends

In this interview, ERJ asks Katsuhiro Saito, responsible for global sales and marketing for Denka CR about current developments (see panel) at the company’s chloroprene rubber and other speciality elastomer businesses

ERJ: Apart from butadiene, what other raw materials costs are affecting Denka’s acetylene-based chloroprene rubber (CR)?

KS: The main raw materials of our acetylene-based CR are chlorine and calcium carbide based on lime and carbon recourse. In addition to them, electric power is the key cost driver.

Denka’s advantage is having its own lime-mine and power plants to grant a more stable cost-structure to its product than butadiene-based CR.

ERJ: Please explain developments at the Denka Performance Elastomers (DPE) plant in Laplace, Louisiana since last year’s ‘cold wave’?

KS: The ‘cold wave’ was the severest winter in the last 30 years in Louisiana in January, 2018. Pipes were frozen at our La Place plant. It has since recovered and been operating at full steam [meeting] strong CR demand.

ERJ: We were really interested in Denka’s comment that the popularity of electric vehicles (EVs) will impact rubber sales. Can the company give more details about which rubber materials and/or rubber parts will be affected by the EV trend and over what timescale?

KS: By the EV’s penetration, the conventional applications of CR, e.g. belts and hoses could be obviously affected. However, since some of them have already been switched from CR to other materials, we are expecting that the influence may be limited until 2030.

On the other hand, demand for other applications, such as air-spring and wiper blade are growing now and they are projected to increase in the future even under EV shift.

ERJ: Is there any update regarding the Evolmer project. When is production likely to start in-line with schedule?

KS: Our Evolmer is being evaluated in various applications for automotive, oil and general industries. Line trials are being conducted at some customers for the final approval. Evolmer’s production is starting in Q1, 2019 in line with the schedule.

ERJ: Finally, any interesting recent news about Denka ER, including new applications for this high-value material?

KS: The capacity of Denka ER was expanded in our Chiba plant in summer 2018 to catch up with growing demand for automotive turbocharger hoses. Though the product has been mainly provided to Japanese parts manufactures so far, we are trying to penetrate more in European and US markets.

Business review

In a recent financial statement, Denka indicated that it is looking for price-increases to counter a “surge in prices” for butadiene.

The target is “to upwardly revise product prices and reclaim profitability,” said the group, adding that costs of raw materials for its acetylene-based chloroprene rubber (CR) were rising.

Denka also commented on the impact of a 7,000-tonne expansion of CR production capacity by a competitor producer in Germany.

“We believe that burgeoning demand will soon catch up to growth in our supply capacity and force us to operate amid a tight supply-demand balance,” it stated.

Separately, the company noted the growing impact of electric vehicles on rubber sales.

Denka also said that its CR business would, this year, benefit from the resolution of production issues at its US plant in LaPlace, Louisiana.

The company is, meanwhile, adding a new speciality elastomer, called Evolmer, to its portfolio which also includes Denka ER, a copolymer of ethylene, vinyl acetate, acrylic acid ester.

The Tokyo-based supplier said it would be producing the new elastomer at its Omi plant in Itoigawa City and achieve sales of 1,500 tonnes per annum by 2022.