ERJ Business Briefing: May/June

Tracking the latest announcements and new business developments in the global rubber and tire industries...

S&P Global Ratings has reviewed its evaluation of Pirelli confirming a BBB- investment grade rating and improving the outlook from “stable” to “positive”. The upward revision, said the tire maker, shows that Pirelli is “well positioned to implement its industrial plan for 2024-2025, has solid cost-discipline and strong positioning in high value tires.” These factors, it added, permit “the generation of a stable operating cash flow with a consequent reduction of financial leverage.”

Swiss building materials group Holcim said 27 June that it is scaling up the use of AI in manufacturing across more than 100 plants worldwide over the next four years, improving efficiency and reinforcing capacity for customers. With AI already deployed at 45 plants to predict and prevent failures before they occur, Holcim “will deepen and broaden this application to boost operational resilience [and] further rolling out a state-of-the-art predictive maintenance solution from leading AI platform software provider C3 AI.

Urethanes and polycarbonates major Covestro on 25 June launched a ‘transformation programme’ targeting annual global savings of €400m in material and personnel costs – including €190m in Germany – by the end of 2028. Savings are to be achieved by: Improving structures and processes across production, admin and other areas; an expanded innovation pipeline, and the use of AI. Focus areas include ‘reliable production, plant utilisation, high-margin demand, and cost awareness,’ said CFO Christian Baier.

Kuraray announced 21 June that its Elastomers business unit will raise the transaction prices of following elastomer products in all regions effective 8 July, or as existing supply agreements allow: All Septon, Hybrar and TU-Polymer: $0.22 per kg ($0.10 per pound). “Increasing feedstock prices, utility, and logistics costs have reached a level beyond unilaterally absorbable by self-saving efforts,” it explained. “This time, it is necessary to recover a portion of these increases to ensure ongoing supply and new product innovation.”

Corteco, the aftermarket unit of Freudenberg Sealing Technologies (FST), is broadening its portfolio in the heavy-duty segment with new products planned for 2024. The company’s current products for the heavy-duty aftermarket includes radial shaft seals for construction and agricultural machinery. Later this year, the company aims to broaden its portfolio by adding accumulators, as demand for “premium products in the heavy-duty and aftermarket segments is steadily climbing.” Read more

Wacker Chemie AG has opened a new corporate headquarters in Munich, Germany, where it will relocate staff from its existing building in Neuperlach. With an area of 18,000 m2 , the new head office in Munich’s Werksviertel district will accomodate 600 employees in five floors.  

Chemours  has announced a temporary halt in the production of titanium dioxide at its production facility in Altamira, Mexico. The move is in response to a “severe drought impacting much of Mexico” and in compliance with a government request to minimise water intake, the company explained. Read more

After a 20-month spell in negative territory, European chemicals production increased for the third month in a row in April, latest data from Cefic shows. Production over the first three months of 2024 grew 0.6% year-on-year and 1.2% quarter-on-quarter. “Considering current levels, EU27 chemicals production would need to grow by 18% to reach the pre-Covid levels,” said Cefic's 4 June report, adding that the latest increase in volumes “must be analysed with a lot of caution.”  Read more

Exhibition space at K2025 is in high demand the world over, organiser Messe Düsseldorf has reported. After the official registration deadline in late May, “all renowned companies in the international plastics and rubber industry will take part in this their leading trade fair held in October next year... Demand for stand space is high and all 18 halls of Düsseldorf Exhibition Centre and the outdoor premises will be fully occupied again,” it stated. Key themes for K2025 will be the ‘circular economy, digitalisation and social responsibility.’

German rail and bus components maker Huebner has strengthened an existing partnership with Alstom Alliance, a network of suppliers established to enhance rail projects worldwide. The partners are currently working together on the production of trains for the New Delhi metro, for which Huebner is supplying 520 gangway systems. Huebner is also supporting the renewal of a major order from the passenger rail agency of South Africa, which is replacing its fleet with 600 new electric trains from Gibela, an Alstom JV. Other joint projects between the two include: Flexity trams, for a number of DACH cities including Zurich; and the Citadis tram model, which is to be put into operation in Casablanca.

Cefic has partnered with the RE-Source Platform to help the chemical sector procure more renewable energy. The RE-Source Platform is a European alliance of clean energy buyers and suppliers, working to facilitate corporate renewable energy sourcing. This platform pools resources and coordinates efforts to improve access to renewable energy at both the EU and national levels. The chemical industry is one of the world’s most energy-intensive sectors consuming over 600 terawatt hours only in the EU.

Japan's Zeon Corp. is building a ‘co-creative’ innovation facility in greater Tokyo. The 4,000m2 unit at the site of Zeon’s Kawasaki synthetic rubber plant is set to be completed by 2026. It will enable “fast, high-quality development of products through cocreation with customers, as well as collaboration with “nearby research facilities and startups.” Operational since 1959, the Kawasaki Plant produces synthetic rubber for automotive belts and hoses, synthetic latex for rubber gloves and materials for lithium-ion batteries.

Sibur is carrying out a “large-scale programme” to improve working conditions in Nizhnekamsk and Kazan, Russia. The company is investing RUB10 billion (€103 million) in “the reconstruction of the infrastructure of enterprises that have not been updated for more than 20 years.” To be completed in 2026, the project involves ‘radical transformation’ of the group’s industrial zones, providing ‘modern’ housing, office work space and other amenities across 11 buildings. The reconstruction of the old plant management building - building A1, the main building in the first industrial zone - have already been completed, expanding workplace capacity from 200 to 400.

Dallas-based Celanese has declared force majeure and sales control for acetic acid and vinyl acetate monomer (VAM) sold in the western hemisphere. The decision is due to “intensifying" conditions and operational failures among suppliers of critical raw materials essential to the production of these products, it said 7 June. “Production challenges caused by these raw material supply disruptions, as well as other operational issues in its acetyl-chain US gulf coast network, are being assessed and actions are being taken to offset production losses,” added Celanese. The group expects its Q2 US gulf coast production of acetic acid and VAM to be negatively impacted by 15-20% as a result of these issues.

Nordmann’s UK subsidiary officially opened a technical centre in Macclesfield on 22 May. The facility is said to mark a “significant milestone” for Nordmann UK in expanding its capabilities and offerings to customers. The unit houses equipment and resources to support R&D, including instrumentation provided by BYK-Gardner, according to a Nordmann announcement.

In May, Dynasol Elastómeros SAU announced that it had obtained two grants from SODERCAN (Sociedad para el Desarrollo Regional de Cantabria) for the certifications ISO 14064 and ISCC PLUS under the "Certificaciones para la mejora competitiva y la entrada en nuevos mercados" programme.

Kordsa has opened a new technical centre in Santa Ana California, through its subsidiary Axiom Materials Inc. - its third* such facility within the last 12 months. The centre will focus on developing materials specifically for the mobility, aviation, and space technology sectors. Target areas will include heat-resistant materials for jet engines, hypersonic flight systems, and hydrogen fuel cells, as well as ustainable solutions for commercial aviation, interior and structural applications, alongside bio-based and recyclable materials for the mobility sector. Kordsa has also opened an Asia Pacific technical centre in Indonesia and European unit in Turkey.

‘Clean’ carbon black and hydrogen manufacturer Monolith has announced an expansion of its corporate headquarters in Lincoln, Nebraska. Monolith’s new office joins two other Lincoln facilities: the Monolith technical center, a state-of-the art rubber laboratory, and a 25,000ft2 warehouse. Nearby in Hallam, Monolith said it also operates “the world’s only commercially operational” pyrolysis facility, Olive Creek 1, and a community-focused office in Lincoln.

Wacker has acquired the manufacturing assets and know-how of US-based Bio Med Sciences Inc., thereby expanding its position in silicone-coated healthcare products. As part of the deal, signed 30 May, a majority of the Pennsylvania-based company's workforce will move to Wacker. The purchase price is not being disclosed, according to the German group's 31 May announcement. More to follow...

Belting and hose manufacturer Ammega recently staged the official opening of its 'fabrication south China hub', an event attended by its CEO, Maciej Gwozdz, CHRO, Sonja Hoeijmakers, and APAC president, Kebao Yang, as well as around 60 distributors, China commercial and plant managers, and business partners. The facility includes a conveyor belting workshop, power transmission workshop, warehouse, and office areas.

OQ Chemicals, which supplies a range of industries including tires, has lifted a force majeure on all products from its German plants in Oberhausen and Marl. Operations resumed there earlier this month following an outage due to a disruption at a raw material supplier’s synthesis gas plant in late February. Among others, the affected products included certain butyraldehydes, butanols, butyl acetate, butylamine, neopentyl glycol.

Figures released in May by the Chemical Industries Association indicate a significant turnaround in the chemical sector. UK manufacturers reported higher sales, higher production levels, and greater capacity utilisation during the first quarter of 2024 compared to the end of 2023. Looking ahead, over 50% of businesses anticipate higher sales and more than 40% expect an increase in new orders, production levels, and capacity utilisation. However, more than 60% foresee labour costs worsening, while 47% anticipate increases in raw material prices.

Finnish industrial rubber group Reka Industrial Plc on 27 May launched a strategy to "grow its turnover to become a medium-sized listed company within next five years." Reka aims to build on the sale of Reka Cables in spring 2023, applying a set of strategic criteria, with Sisu Partners OY as financial advisor.

Adhesives supplier HB Fuller has acquired ND Industries Inc., a provider of speciality adhesives and fastener locking and sealing solutions. The acquisition will help HB Fuller achieve top growth priorities in “highest margin, highest growth market segments within the functional coatings, adhesives, sealants and elastomer (CASE) industry.” ND Industries, according to the US supplier, serves customers in the automotive, electronics, aerospace, and other industries. Read more

DuPont is spinning out its ‘electronics’ and ‘water’ businesses with the remaining units, such as Kevlar fibres and Tyvek protective films operating within New DuPont. The move, announced 22 May, is just the latest in a series of structural changes at the chameleon-like group over the past two decades or so. Among the more recent of these are: the $11bn sell-off of most of its Mobility & Materials business - thermoplastic copolyesters, ethylene acrylic elastomers, polyamides and polyesters - to Celanese in 2022; and spin-off of Chemours, comprising titanium technologies, chemical ‘solutions’ and fluoroproducts (but not Kalrez perfluoroelastomers), in 2015. More to follow…

UK-based waste tire pyrolysis company Circtec has secured €150m in funding for the construction of its flagship plant in Delfzijl, The Netherlands. Investment companies Novo Holdings and AP Moller Holding supported the financing: leading with a €75mequity investment. Read more

Seals maker Klinger Group has recently announced the acquisition of Diunis Wilhelm Gärtner GmbH Stanztechnik, a 'volume cutting' company based in Wuppertal, Germany. Diunis specialises in manufacturing small, non-metallic gaskets, said Klinger, which described the acquisition as "a strategic extension of its current product range," and a "significant step in the company’s expansion efforts."

In April 2024, the EU car market grew by 13.7% year-on-year, with new registrations totalling 914k units, driven by strong increases across all major markets: Spain (+23.1%), Germany (+19.8%), France (+10.9%), and Italy (+7.7%), ACEA reported 22 May. Battery-electric car registrations rose by 14.8% to 109k units, with their market share holding steady at around 12%. More to follow...

Standard Profil's plant in Bulgaria has gained a 'Q1 quality certificate' from Ford, a recognition also achieved by the company's Manisa and Morocco facilities in the past year. At a ceremony, Adrian Gabriel Teodorescu, Ford STA site engineer presented the award to SP Bulgaria Plant general manager Adrian Gabriel Teodorescu. 

Shin-Etsu Chemical is investing Yen2.1 billion (€12.4 million) in a new silicone products manufacturing plant in Zhejiang province, China, where it already operates an existing facility. Once completed, Shin-Etsu plan to relocate its existing operations to the new facility, which will be built in Pinghu city, about 85km from Shanghai. The new site will span an area of 40,000m2, double the size of the current plant.

In Thailand, Sri Trang Agro-Industry has posted a 9.1% rise in first quarter sales, to THB23.6 billion (€600 million), compared to the previous quarter. The natural rubber (NR) supplier and processor linked the sequential improvement to stronger NR pricing, increased demand from “non-China” tire producers and recovery in the latex gloves market.

Dow on 16 May announced the "mechanical completion" of its new Voratron adhesives and gap filler production line at its polyurethanes systems House in Ahlen, Germany.

UK graphene technology firm Levidian is working with materials scientists at Avon Protection to "assess the impact of graphene in a tire tread formulation, where positive findings have been obtained." Further work is now planned to look at applications in tire sidewalls and inner liners, as well as other rubber formulations. Levidian recently unveiled a prototype truck tire with a new tread formulation said to reduce rolling resistance by around 23% and improve fuel efficiency by 3-4%.

The UK government has been urged to reform its “dated” plug-in truck grant, introduced eight years ago, in order to support the sector in developing new-zero emission truck technology. The 2016 grant scheme seeks to help operators switch from conventionally fuelled heavy commercial vehicles to zero emission alternatives, according to the Society of Motor Manufacturers and Traders. However, models can only be eligible after undertaking an approval process that takes around two years, said the industry body.  Read more

MARGMA president Oon Kim Hung comments on US tariff hike on Chinese goods: "Though the news may bode well for Malaysian rubber glove players, we do not expect much immediate impact, as it will only take effect in 2026. About 35% of our rubber glove exports are to the US market, contributing approximately RM4bn in 2023. However, we should not forget that the US also has its own domestic production. We believe that Malaysian producers should continue to invest in ESG matters, and the way forward is to establish sustainable and equitable prices.”  Read more

Indian chemicals supplier SRF Ltd has reported a 9% year-on-year increase in fourth quarter revenue within its technical textiles business. The unit, which among other products manufactures nylon tire cords, reported sales of INR4.7 billion (€52 million) during the quarter ended 31 March, up from INR4.3 billion reported last year. Segment’s operating profit increased 44% to INR700 million. During the quarter, the business witnessed volume growth in the nylon tyre cord fabrics and the polyester industrial yarn segments.

Avon Protection has been awarded a contract to for the continued supply of the general service respirator (GSR) for the UK ministry of defence (MoD), the manufacturer has announced. The award builds on an earlier contract in place since 2018 and ensures the supply of ‘chemical, biological, radiological and nuclear’ respirators to all branches of the UK armed forces. The contract, over four years, with five further 12-month option periods is valued at up to £38 million (€44 million), Avon Protection said 9 May. Read more

AirBoss of America has been awarded a contract valued at up to $45 million (€41 million) to provide its ‘Bandolier’ pre-packaged explosive charge to an unnamed NATO partner nation. Subject to satisfaction of customary conditions, deliveries under the contract are expected to commence in the second half of 2024 and continue through to the end of 2025. ‘Bandolier’ is a lightweight and modular energetic system that can be employed across mobility, counter mobility, and survivability mission profiles.

French chemicals supplier Arkema SA has agreed to acquire Dow’s flexible packaging laminating adhesives business. The Dow business, which manufactures adhesives for the flexible packaging market, generated annual sales of around $250 million (€232 million), Arkema announced 2 May. The proposed acquisition will significantly expand Arkema’s portfolio of solutions for flexible packaging, enabling the group to become “a key player in this attractive market”.

Trelleborg has finalised the previously announced acquisition of pipe-repair specialist BP-Tech Group. Based in Rajamaki, BP-Tech Group specialises in ‘trenchless pipe repair’ including liners, resins and equipment. The Finnish group reported sales of just over SEK220million (€19 million) across 24 countries in 2023.  Read more

Hankook's acquisition of thermal management systems supplier Hanon Systems "increases diversification but raises leverage,” according to Moody’s Ratings. The proposed purchase, it said, will significantly enhance the tire maker's scale and business diversification but weaken profitability due to Hanon Systems' high financial leverage and moderate profitability." The focus will be on how Hankook "balances Hanon Systems' business growth against its elevated financial leverage and achieve synergies between the two somewhat distinct businesses."  Read report

Global production of chemicals increased in the first quarter of 2024, due largely to a positive industry trends registered in February, the VCI has reported. Combined production of chemicals and pharmaceuticals grew 3.5% globally, reflecting a 6.1% year-on-year increase in chemicals manufacturing and 4.8% decline in the pharma sector.  Read more

Dutch startup Meridia has closed a 'series A' funding round, securing €5.2 million from new investors to scale up its data-verification technology. The funds will accelerate the commercialisation of the ‘Meridia Verify’ system, which enables companies to “accurately assess and mitigate risks" related to agri-commodities including rubber.  Read more

Italian tire distributor Magri Group and Sri Lankan heavy tire manufacturer Global Rubber Industries (GRI) have entered a strategic partnership, with particular focus on farm tires.  Read more

Injection moulding machinery supplier Engel “remains cautious” about prospects for its financial year 2024, started 1 April. A "high order backlog has so far let us get off with a black eye,” commented group CEO Stefan Engleder in a 21 April statement. However, according to the Engel leader, these orders are “nearly exhausted” at the injection moulding machinery maker.  Read more

ExxonMobil Chemical is to closing the primary chemical production unit at its Gravenchon site in France, reporting that the unit has lost over €500 million since 2018. The plan, presented in April to employees involves shutting down the steam cracker and related derivatives units and logistics facilities.Full closure of the facility in Port-Jerome-sur-Seine, Normandy, is expected to impact 677 jobs, which will be reduced over time through 2025.  Read more

Dutch tire machinery maker VMI has seen rising demand for smaller production runs, due to the "ever-increasing variety of tires available." As a result, the company has developed gear pump extrusion ‘Unixx Belt Maker’, designed to support small batch production, said VMI in its latest sustainability report. The first such machines are now in operation at “some of Europe’s leading tire manufacturers,” said report, issued earlier this year.  Read more

More items to follow...

Business Briefing - March/April