Denka "bringing down" US chloroprene plant amid regulatory, cost pressures

Tokyo – Denka Co. has confirmed that its US chloroprene rubber unit, Denka Performance Elastomer LLC (DPE) in Louisiana, remains under indefinite production suspension and is being systematically dismantled.

In a 7 Aug first quarter statement, the Japanese group said it is “bringing down the manufacturing facilities and equipement into a safe status.”

DPE is also "removing and disposing" of hazardous materials, including raw materials and intermediates remaining in the equipment while continuing stakeholder discussions "to minimise future costs."

“We are supplying existing inventory produced before the production suspension to users of DPE products, while gradually switching over to products manufactured at the Denka Omi plant [in Japan],” said Denka.

Key financial impacts tied to DPE’s shutdown include a Yen900 million (€5.2 million) uplift to operating income in the first quarter, ended 30 June.

The gain was despite a Yen2.1 billion extraordinary losses due to write-downs of raw materials and intermediate goods.

Denka plans to offset the losses via extraordinary gains, including an Yen8.2 billion gain on land sale elsewhere.

Over the course of the fiscal year, ending 31 March 2026, the group forecasts a total positive impact of Yen9.0 billion from the DPE closure, supported by the fundamental cost-cutting steps.

The Louisiana plant has been at the centre of recent tensions between Denka and the US Environmental Protection Agency (EPA) over emissions controls.

Last year, the EPA introduced new standards covering the production of more than 200 chemicals, including chloroprene rubber, with a 90-day compliance period.

DPE successfully appealed against the measure, extending the emissions-reduction deadline by two years.

However, earlier this year, the company announced it would 'indefinitely halt' production at the US unit, citing "significant cost, production, and other operational challenges."

In its latest quarterly statement, Denka said a presidential proclamation in July which extended the grace period for air emission regulations in the US by two years had not affected its policy to maintain the suspension of production.