Ticona Rounding out the portfolio from within

IT HAS gone quiet recently around Ticona, the technical polymers arm of Celanese – if you filter out the constant rumble of planes flying over its headquarters at Kelsterbach, Germany, near Frankfurt airport. Lyndon Cole, ceo of Ticona and member of the
Celanese managing board with responsibility for Asia, acknowledges that changes in ownership may have created an identity problem for the plastics manufacturer, although not an identity crisis.

Celanese and Ticona are in a transition process, and ‘there have been uncertainties’, he remarks. Along with the question of when and how private equity investor Blackstone – which bought Celanese in 2004 – intends to exit, ‘another uncertainty is the airport’.

Frankfurt wants to build an additional runway that would see planes fly directly over Ticona’s 90 000 tonne/year polyacetals
(POM) plant at Kelsterbach. A public enquiry to assess risks of an air crash into the facility will be completed in 2007. Whatever the outcome, Cole says, ‘we won’t negotiate’ about moving the world’s largest single-train polyacetals (POM) unit.

‘All our technical capability is here’, he points out. The plant, which is capable of producing 130 000 tonne/year but doesn’t yet have a permit for this, ‘is legal, safe and there is a lot of money involved’.

Together with Polyplastics, a 45:55 joint venture with Japan’s Daicel, Ticona is the world’s leading producer of POM, with capacity of 330 000 tonne/year.

Alongside Kelsterbach, the ‘truly global’ company has a US base at Florence, Kentucky.

Along with POM, Ticona claims leadership in ultra-high molecular weight polyethylene. With the start-up of a new 20 000 tonne/year plant in 2007 in China, its worldwide capacity will rise to 90 000 tonne/year.

Fortron Industries, the US joint venture with Korea’s Kureha, sees itself ahead in linear polyphenylene sulphide (PPS). A new $65m, 15 000 tonne/year plant at Wilmington, North Carolina – also due for start-up in 2007 – will be the world’s largest.

The Celanese offshoot is also a solid performer in polybutylene terephthalate (PBT) as well as in long fibre-reinforced plastics and liquid crystal polymers (LCPs).

Since the Blackstone buyout, much of the news has concerned portfolio adjustments. Nylon activities were sold to BASF in 2003, and this autumn the company said it would sell the Topas cyclo-
olefin copolymer (COC) business to a joint venture of Polyplastics and Daicel.

‘COC was too much of an uphill battle,’ explains Cole. The 30 000 tonne/year plant at Oberhausen, Germany, is too big. What’s more, it’s in Europe, while the more sophisticated optical applications are in Asia.

With Topas running up annual operating losses of €25m, ‘we didn’t have the resources to develop the optical side,’ he adds.

Ticona also recently sold its technology for a component of the high performance polymer polyether ether ketone (PEEK) to Degussa. Cole says: ‘we couldn’t and wouldn’t take up the battle with Victrex,’ the only major commercial PEEK producer.

As Cole sees it, Ticona’s ‘real challenge’ now is to return to growth and move up the value chain by developing new grades and applications within its current portfolio.

Acquisitions look unlikely in the near term. ‘No-one is selling polymer assets at the high end of the chain, where Ticona wants to play, and expanding into new markets is difficult’.

With energy and raw materials soaring, Ticona has had ‘profitability problems’ this year, Cole says. Hopes that the German elections would boost fourth quarter earnings were dashed by the inconclusive outcome.

Like other plastics players, Ticona is pushing for price increases, while improving R&D efficiency and controlling expenditure. Major new capital investment is not currently on the agenda. When it is, management plans to look seriously at eastern Europe, where many automotive customers are relocating.

About half of Ticona’s business is with the automobile industry, ‘the main sales driver’. Other core customers are the medical sector, which accounts for 3%, and electrical and electronics accounting for 6%.