Lanxess begins process to add CR capacity

Nuremberg, Germany - Lanxess AG is applying to the German authorities to expand capacity for polychloroprene rubber at Dormagen in Germany. The company currently has a licence to make 75 000 tonnes per year, and is applying to increase this to 100 000 tonnes annually. Dr Günther Weymans, head of Lanxess technical rubber products business, told ERJ that he does not anticipate receiving approval from the authorities until the end of 2007.

If approval is granted, said Weymans, the company would then make a business decision on whether to invest in new capacity. He added that Lanxess would not apply for the new licence if it did not intend to put the extra capacity in. Weymans said the Dormagen CR plant is currently operating at full capacity.

In October 2005, Polimeri Europa closed its CR factory in Champagnier, France following difficulties with the supply of raw materials, and low margins. Since then, the industry has been short of chloroprene materials and prices have risen substantially, to the point where Weymans said the business is at reinvestment levels. Weymans said Lanxess is seeking at least 15 percent EBITDA return in all its rubber businesses, as this is the level it considers sufficient for a sustainable business

Asked if Lanxess will seek further price increases in CR, Weymans said there is little room for manoeuvre in pricing, as the customers have already seen a series of increases, and Lanxess recently announced further increases due to take effect from 1 July. However, the corporate vice-president declined to rule out further increases.