ERJ Business Briefing: July/Aug

Polish chemical group Qemetica on 29 Aug announced an agreement to acquire PPG's silicas products business for around PLN1.2bn (€310m). The acquisition includes two factories - in the US and The Netherlands - as well as rights to "conduct manufacturing and R&D activities in two additional US locations." PPG’s silica products business manufactures and supplies precipitated silica products for a range of applications including tires, batteries and 'fillers'. Read more

Linglong Tire has signed 16 long-term cooperation agreements with strategic partners to work more closely with in the future. The signings took place during a 'dealers event' held in early August at the group's European tire plant in Zrenjanin, Serbia. Feng Wang, CEO and president of Linglong Tire was present at the event, which discussed, among other topics, the group's future growth plans. Around 130 dealers from the Middle East, Africa and the Asia-Pacific region attended the meeting, which followed an earlier such event for Europe-based suppliers.

Pyrum Innovations on 28 Aug reported progress with commissioning/optimisation work on newly installed reactors (TAD 2 and 3), as part of a planned expansion of its flagship tire pyrolysis plant in Dillingen/Saar, Germany. Most recently, a third commissioning run of TAD 3 was completed after three weeks of continuous 24/7 operation. The reactor ran stably at over 70% of the planned nominal output, with Pyrum now planning to run TAD 2 at up to 100% of capacity in the coming weeks and use the data collected to test TAD 3 for 100% run rate. 

Ansell Ltd has completed the previously announced €600m acquisition of Kimberly-Clark's Personal Protective Equipment (KCPPE) business. The acquisition, completed earlier this summer, is expected to strengthens Ansell’s market position in personal protection solutions, expand product portfolio, and enhance service capabilities. The deal included the Kimtech brand of PPE for lab and cleanroom environments and the KleenGuard brand of PPE for customers in industrial environments. (ERJ Report)

Michelin-owned natural rubber producer and processor SIPH has detailed its progress in complying with the EU Deforestation-free Regulation (EUDR). In a recent presentation to stakeholders in Abidjan, the company said it ‘geolocated’ all village plantations under its control, and the traceability of each batch of rubber produced to ensure that plantations are managed responsibly and sustainably. Official implementation of EUDR, it said, is scheduled for 25 Jan 2025.

BASF and Stockmeier Urethanes USA have announced the commercial production of polyurethane binders for playground and recreational surfacing made with 100% biomass balance (BMB) Lupranate methylene diphenyl diisocyanate (MDI). BASF produces the BMB MDI at its integrated site in Geismar, Louisiana which is then used in the production the “pour-in-place” Stobielast S PU binders by Stockmeier.

German polyurethanes specialist Stockmeier has joined the tire circular economy initiative AZuR, Allianz Zukunft Reifen (Alliance Future Tires). The Lemgo-, Germany-based manufacturer will be contributing its environmentally friendly products and processes, including its Stobicoll R binders to the project to advance the sustainability goals of the initiative. According to Stockmeier, the binders play “a crucial role” in tire recycling by converting EPDM granules into new, durable products. 

After a surge since July, natural rubber prices in India have stablised, but at near-record levels, According to figures posted by the Association of Natural Rubber Producing Countries, RSS4 was trading at $280.2/100kg on 23 Aug. This was just slightly off the highs seen earlier this month on the Kottayam exchange, with RSS4 peaking at around $291/100kg on 8 Aug – up from $247/100kg a month earlier. The surge has been linked to the impact of adverse weather conditions on local growers, a dip in overseas supplies, and low inventories at tire makers in India.

US adhesives major HB Fuller has acquired HS Butyl, a family-owned, UK-based manufacturer of butyl tapes for watertight sealing applications in the construction, infrastructure, automotive and renewable energy industries. Headquartered in Lymington, England, HS Butyl has sales of more than $23m and exports to more than 50 countries worldwide. The new business will operate within St. Paul, Minnesota-based HB Fuller’s construction adhesives global business unit.

Malaysia's natural rubber (NR) production increased marginally (0.2%) year-on-year in June to just under 30 kilotonnes, figures from the country's ministry of economy show. Export shipments fell 21.6% month-on-month to 39,800 tonne, with China remaining the main destination, contributing to 35.7% of exports.  Germany (11.8%), India (11.0%), the UAE (6.6%), and the US (6.2%) ranked among the top five export destinations.  Read more

Rogers Corp. has reported stronger quarterly sales within its main elastomers business, helped by electric vehicle demand. Elastomeric Materials Solutions (EMS) posted a marginal year-on-year decline in sales to $95 million for the three months to end of June, but revenue was up 10% sequentially.  Read more

The International Rubber Glove Conference & Exhibition (IRGCE) 2024 is set to take place in Kuala Lumpur, 3-5 Sept, the Malaysian Rubber Glove Manufacturers Association (MARGMA) has announced. The 11th staging of the IRGCE has attracted 174 exhibitors from about 20 countries including China, Japan, the United Kingdom, Germany, India, Indonesia, Switzerland, Taiwan, Thailand, Vietnam, and others. Around 12,000 visitors are expected. 

Scandinavian Enviro Systems (Enviro) has received SEK25.6m (€2,3m) in ‘compensation’ for progress made establishing a tire pyrolysis plant in Uddevalla, Sweden, Half of the payment is in the form of shares in a JV with financial partner Antin. Enviro will receive further such payments as it meets project targets agreed by the JV, in which it envisages gaining a shareholding of up to 30%. The project is also being backed by Michelin.

The US International Trade Commission has voted to extend antidumping and countervailing duty orders on truck and bus tires from China.The 8 Aug decision - a five-year sunset review - means that 2019 countervailing duties ranging from 21% to 63.3% and antidumping duties of 9% to 22.6% on Chinese TBR tires will remain in place until the next review in 2029. 

In its latest analysis of the European market for electric vehicles, HSBC Global Research has noted persistent weaknesses in sales momentum, lack of new government incentives and the inflationary impact of the (provisional) import duties on China-made BEVs. These factors, it said, “lead us to lower our expectations for electrification in Europe once more. Sales in Germany are down 20% through July 2024, and we expect BEV penetration in the largest EU car market to decline by more than 2ppt to 15% this year.”

Kraiburg TPE announced 12 Aug that it has engaged Anders to represent the company locally in the Latin American market thermoplastic elastomers. Anders, it noted, has over 60 years of experience in the region's plastics industry. “Demand for thermoplastic elastomers in Latin America is widespread and to participate in it, we needed a strategic partner to help us achieve our growth objectives in strategic regions such as Peru, Ecuador, Chile and others. Anders was the right component for the Andean region, especially in Peru,” said Kraiburg TPE. 

Trelleborg Sealing Solutions (TSS) is to acquire Magee Plastics, a US manufacturer of thermoplastic and composite materials for the aerospace industry - by Q4/24. The Warrendale, Pennsylvania-based thermoforming/vacuum-forming specialist achieved 2023 sales of around SEK230m (€20m). The acquisition “broadens Trelleborg’s interior fittings offering for the aerospace industry,” said Jürgen Bosch, business area president for TSS in a 14 Aug announcement.

The European Commission has approved – under EU State aid rules – a €99.5m Romanian measure to support Nokian Tyres’ establishment of a €650m tire factory in Oradea, Romania, Nokian announced 13 Aug Once completed the factory will produce approximately 6 million tires per year with an expansion potential in the future. The first tire was produced on 1 July 2024, and commercial production will start early 2025.

TKH Group NV, the Dutch parent group of tire and rubber machinery major VMI, has acquired Liberty Robotics Inc., a 3D vision guidance systems provider for robotic applications. Ann Arbor, Michigan-based Liberty Robotics, noted TKH, has established itself as a key player in automation for the automotive sector, its systems enabling precise end-of-arm robotic guidance for applications including part handling and the application of coatings and sealers. With 2023 sales of $7m, Liberty Robotics has 32 employees, of whom 70% are in R&D. The acquisition, said TKH’s 2 Aug announcement, complements the group’s advanced 3D vision sensor technology and global market presence.

Prices for natural rubber are continuing to run at record high levels in India, with RSS4 trading at around $291/100kg in Kottayam on 8 Aug – up from $247/100kg a month earlier – figures posted by the Association of Natural Rubber Producing Countries show. The surge is being linked to the impact of recent adverse weather conditions on local growers, a dip in overseas supplies, and low inventories at tire makers in India.

Dallas, Texas-based Celanese Corp. on 8 Aug ended the force majeure declared for acetic acid and vinyl acetate monomer (VAM) sold in the Western Hemisphere as “the underlying supply-chain conditions behind the declaration have stabilised.” The measure was imposed 7 June, largely due to “operational failures experienced by multiple suppliers of critical raw materials essential to Celanese’s production of these products."

Flexsys is increasing prices for all insoluble sulphur, 6PPD and 4-ADPA products sold worldwide, the US-based supplier has announced. The increases of up to 12%, depending on product and world region, are effective for all shipments on or after 1 Sept or as customer contracts allow.

Kraton Corp. recently announced the completion of a global bond issuance, raising €1bn with the backing of a Korea Development Bank credit guarantee. This move, it said 11 July, “underscores the strength of Kraton’s market position and its innovative partnership with parent company DL Chemicals.” The three-year global bonds were issued at a competitive rate, reducing Kraton’s overall capital cost thanks to the KDB-backed credit guarantee – described as “the largest ever by a domestic bank on global bonds.”

Avon Technology's (formerly Avon Protection) Team Wendy business has received a $19.5m follow-on delivery order from the US Defense Logistics Agency under a 'second-generation advanced combat helmet' framework contract announced in February 2022. “This gives good order-cover well into FY2026,” said Avon, noting that overall trading has continued to be strong into H2/24. As of 25 July, the UK group expected revenue growth of around 11% (from ~10% previously) and adj. operating profit margin slightly above 11% (from 10% before).

Bridgestone is raising shipping prices for pipes, fittings, and parts related to cold and hot water supply piping in Japan due to a ‘sharp’ rise in raw materials costs. According to the Japanese group, prices have also been impacted by global inflation, and logistics and labour costs.

The European Commission has recently approved two Dutch state aid schemes focused on sustainability and hydrogen production. The first, a €750m project to decarbonise industrial processes, aims to lower GHG emissions from industrial activities by 40%. The second, worth €998m, focuses on boosting production of renewable hydrogen via projects involving advanced electrolysis technologies.

Bekaert’s Rubber Reinforcement unit has posted a 13.2% year-on-year decline in first half sales to €885m, while earnings (EBIT) fell 15.7% to €86m. The figures included an 8.9% year-on-year fall in second quarter consolidated sales to €437. “Despite lower sales volumes, the business delivered a margin improvement through production cost optimisations, a high level of plant utilisation and growth in higher-margin, innovative tire cord constructions,” said the Belgian group.

German industry association the VDMA has reported a 12% year-on-year decline in incoming orders in the mechanical and plant engineering sector in H1/24. Domestic orders fell 18%, while there were 9% fewer orders coming from abroad. Orders from Euro countries fell 14% and by 7% lower from non-Euro countries. "A turnaround is not yet in sight and,... the economic stabilisation that was still emerging at the start of the year has recently suffered a setback," commented Dr. Ralph Wiechers, VDMA’s chief economist.

The London-based Chemical Industries Association has urged the UK’s new Labour government to adopt a policy of “stability and partnership with business, trade unions and others to deliver economic growth, environmental progress and social inclusion for business and for the UK as a whole.” With exports worth around GBP60bn, it noted, the UK’s chemicals industry makes products that are integral to about 96% of all manufactured goods, from food and medicines and coatings to materials for cars, planes, mobile phones and electric vehicle batteries.

Pirelli has reported a 4% year-on-year increase in first half earnings to €768m on sales about level with the prior-year period at €3.4bn. In terms of sales, the tire maker said 4.6% organic growth was almost entirely offset by the 4.3% negative impact of forex and “hyperinflation” in Argentina and Turkey. Read more

Liquid-phase mixing specialist Ecombine is considering establishing a production facility outside of China, potentially in Europe, a company official informed ERJ. The plans, he said, are in response to increasing interest in the Chinese company’s patent-protected technology across the global tire & rubber industry.  More to follow...

Clermont-Ferrand, France-based Carbios has announced a deal to licence its PET biorecycling technology to SASA for use in a planned 100ktpa, enzymatic depolymerization plant in Adana, Turkey. The Turkish company is a major manufacturer of polyester, fibre, filament yarn, polyester-based polymers, speciality polymers and intermediates. Its project targets growing global demand for sustainable textile materials, particularly in Europe.

Michelin will tread carefully when it comes to merger & acquisition (M&A) activities in the current business climate, according to its CEO Florent Menegaux. “What we still see in the market is that there are very high price expectations in M&A, whether it's public or private,” the group leader said on a 24 July earnings call. “Of course, we are following our [expansion] strategy, but won't do stupid things.”

The Global Platform for Sustainable Natural Rubber is extending the deadline for its call for ‘capacity building’ project proposals by one month to 31 Aug. Suggested topics for projects – with budgets ranging from $50k/yr to €500k/yr – include: smallholder capacity building; environmental management; deforestation; regulatory compliance; and farm mapping/traceability. The vetting process will be completed by end 2024, with GPSNR members to select projects by early 2025.

Indian tire maker Ceat has introduced a series of price increases and expects to ‘more instalments’ as the cost of raw materials, particularly natural rubber (NR) increases in the country. Domestic NR prices have surged by about 25% to 30% over the past few months and currently, stand at INR207/kg, said managing director and CEO Arnab Banerjee. The figure “is the highest in the last 13 years,” said the Ceat leader.  Read more

Goodyear will report second quarter financial results after market-close on 31 July, followed by an investor-call 1 Aug. Leader Mark Stewart and his team will likely be upbeat, having just announced a $905m deal to sell off the group’s OTR business to Yokohama Rubber Co. The Akron group’s shares were trading slightly lower a day after the widely anticipated development - at $11.94, from $12.18 on 22 July.

Moody’s has upgraded Michelin's long-term rating to A2 with a 'stable outlook', from A3 with a 'stable outlook'. The decision, issued 11 July, reflects the French group’s "track record of robust operating performance, stable leading position in the global (premium) tire market and growing presence in profitable non-tire-related areas.”

Evonik has raised its outlook for 2024 earnings (adjusted EBITDA) to €1.9-€2.2bn, from €1.7-€2.0bn previously, on the back of strong second quarter. Gains included a 29% year-on-year rise in adjusted EBITDA to €578m, which was also 11% higher “than the already good first quarter.” Evonik linked the sequential improvement to factors including “continued strict cost discipline” and lower production costs.

Fitch Ratings has revised up Pirelli’s rating from ‘BBB-’ to ‘BBB’ its long-term issuer default rating (IDR) and the rating on Pirelli’s senior unsecured debt. The outlook on the IDR rating is ‘stable’.  Fitch said the upgrade “reflects Pirelli’s strong profitability and robust free cash flow, allowing for deleveraging to below their previous positive rating sensitivity.” It also expects ‘high-value’ tire sales to remain resilient and support profitability, aided by more stable raw material prices. “Although Pirelli is smaller and less diversified than competitors, its technological advantages and focus on less-cyclical markets mitigate these drawbacks,” noted Fitch. 

US compounder Laur Silicone has increased its production capacity with the addition of a new twin screw mixer from Italian machinery maker Colmec Conical. The new addition, it said, ensures “consistent, uniform mixing of silicone compounds,” with “perfect dispersion and homogeneity of ingredients.” With the “completely automated process”, Laur Silicone expects to achieve enhanced production efficiency, speed, and “highest product quality standards.”  Read more

A rubber-focused industry cluster in Akron, Ohio has won a $51m federal investment award to advance tire and rubber projects in the US state. The award - part of Tech Hub Phase 2 initiative to support technology hubs - was given to Polymer Industry Cluster, and will be matched by a $7m partner investment, to bring the total to $58m. The grouping includes, Goodyear, Huntsman, Bridgestone, Continental, Parker Hannifin, Synthomer, and Promerus.  Read more

At the UK’s Farnborough Air Show, 22-26 July, Trelleborg will highlight group efforts to enhance its aerospace logistics capabilities. This includes investing in a new 1,394m2 warehouse  at Burntwood, Staffordshire, UK, scheduled to open in September. Terry Groom, general manager, aerospace hub Europe north, said: “The new facility more than doubles the footprint of the current warehouse complex. It will support the expanding aerospace business with… enhanced quality control facilities and expanded storage capacity, as well as new assembly, kitting and special handling capabilities.”

In an annual survey, Asahi Kasei asked car users in the major automotive markets about their vehicle purchasing intentions. Some 69% of the respondents in China said it was “likely” or “very likely” that their next car would have a pure electric drive. However, compared to 2020, the survey found that willingness to buy electric vehicles (EVs) had not significantly changed. While in China and Germany it rose by 6% and 8% respectively, there was a 14-percentage point decrease in the US. The fade out of governmental subsidies and the high cost of electric vehicles are key factors for this consumer sentiment at the end of 2023, said Asahi Kasei.

Petlas Tire Corp. announced 8 July that it has been awarded the ‘national accreditation certificate’ by Turkish accreditation agency TÜRKAK. This certification, it stated, allows Petlas's nationally accredited tire testing laboratory to provide international compliance approval for aviation tires.

Poland-based compounder Sanok Rubber has received the ‘Rzeczpospolita Eagles’ award, the company recently announced. The distinction, it said, “is given to companies that demonstrate outstanding achievements in innovation, management, and contributions to the development of the Polish economy.”

Scandinavian Enviro Systems (Enviro) on 8 July reported an order for deliveries of 500 tons of recovered pyrolysis oil from a European oil player. The "leading company" within the petrochemical supply-chain and has previously received smaller deliveries of tire pyrolysis oil from Enviro.” Deliveries linked to the new order will start in August 2024 and continue until year-end. The tire pyrolysis oil will be delivered from Enviro’s plant in Åsensbruk.

In Germany, trade union IGBCE and employers' association BAVC agreed a deal providing wage increases ‘totaling’ 6.85% for 585,000 employees in the chemical and pharmaceutical industry nationwide. In addition, IGBCE members who are covered by collective agreements will receive an additional day off per year. Such a preferential arrangement in a large collective agreement is a nationwide first, according to an IGBCE statement

Covestro and BP have signed a long-term power purchase agreement for renewable energy from a solar power plant in Spain. The 10-year agreement increases the share of renewable energy in Covestro’s total electricity consumption in Spain from less than 10% to 30%, the German chemicals supplier said 4 July. With the new agreement, a significant portion of the electricity consumed by the company's main production site in Tarragona can now also be supplied by renewable sources, enabling Covestro to cut its CO2 emissions by 16,000 tonnes per year.

Japan's Zeon Corp. has confirmed the schedule of a previously announced plan to expand its manufacturing facility in Pasadena, Texas to increase production capacity for hydrogenated nitrile rubber (HNBR). Read more

Hutchinson SA has expanded its operations in India with the opening of a new automotive parts production facility in Chennai, southern India. The facility will produce belt drive systems, precision sealing systems, and anti-vibration solutions, said Hutchinson confirmed in a statement to ERJ. Read more

Evonik has commissioned a new plant for Aerosil ‘easy-to-disperse’ silicas at its production facility in Rheinfelden, Germany. The capacity expansion will see the German group using an “innovative dispersion technology for fumed silica” at the site in southern Germany. The technology “simplifies” the incorporation of silica as a rheology additive into paint and coating formulations. As a result, the silicas enable “easier, faster and more sustainable formulation of paints and coatings,” according to Evonik.

More items to follow...

ERJ Briefing May/June