News Focus: Huntsman sharpens focus on India, China

07 May 2011 00:00  [Source: ICB]

President and CEO Peter Huntsman aims to boost sales in China and India. New capacities and expansions are planned

China and India are high on Huntsman's agenda for the Asia-Pacific region. The US chemical producer has built a substantial position in these key markets and is now actively looking to add volumes.

"In the next five to seven years, Asia-Pacific will account for one-third of Huntsman's sales," said president and CEO Peter Huntsman, in an interview with ICIS in Mumbai, India. "Two years ago, Europe was our single largest market, but within three years, it will be the third-largest behind North America and Asia."

China accounted for about 10% of the company's sales of $9.3bn (€6.3bn) in 2010 and the target is to achieve sales growth of more than 10%/year.

The Asia-Pacific region, which includes India, accounted for 24% of sales, versus 31% for the US and Canada, 30% for Europe and 15% for the rest-of-the-world category. Asia-Pacific as a percentage of sales has doubled from 12% since Huntsman went public in 2004. "We are looking to spend," stated Huntsman.

The company aims to double its methyl di-p-phenylene isocyanate (MDI) capacity in the country and has plans for a new 240,000 tonne/year plant in Caojing. The project, which is awaiting Chinese government approval, is scheduled for mechanical completion by the fourth quarter of 2013.

Besides new plants, $40m-50m has been earmarked for a technical center that will employ 200 scientists and support the company's sales activities in the country.

NEW INDIA INVESTMENTS
India, too, will see new investments that should help double the company's sales in the country every five years.

"We have taken time to understand the culture, hire local people, build local R&D [research and development], tech support and then build local operations," stressed Huntsman.

The company may not be a familiar name in the country, but its Araldite brand of adhesives is very popular.

"We do not sell a single product directly to consumers except Araldite and India is the only country where we do TV advertising for this product," said Huntsman. "We have 1m distribution points for Araldite; we have the market and we have to build that."

Huntsman's Araldite line of industrial and consumer adhesives is based on epoxy, methacrylate and polyurethane (PU) chemistries.

Expansions either through new plants or acquisitions are in the pipeline for each of the company's businesses, except titanium dioxide. The capacity of a dyes facility in Vadodara, Gujarat, will be increased and capacity for ethylene oxide (EO)-based derivatives at the recently acquired Laffans Petrochemicals will be doubled from a current 60,000 tonnes/year.

Huntsman completed its acquisition of Laffans on April 4, after announcing the deal in ­August 2010.

Laffans manufactures ethoxylates, glycol ethers, acetates, triethanolamine (TEA) and brake fluids. Details of this expansion have yet to be firmed up but the company's ambition is to complete it in two years.

Earlier this year, the company also announced plans to build a $10m PU systems house in Pune, Maharashtra, to be completed by April 2012.

RELIANCE TIE-UP?
In addition, further opportunities for the company could come up in the future, which may include the possibility of deepening its ties with India-based energy, refining and chemical giant Reliance Industries, which supplies EO to Laffans.

Reliance is currently working on expanding petrochemical operations, including building a new cracker and derivatives complex at Jamnagar on the west coast of India.

"There is a lot we can do with Reliance: they have a competitive raw materials source and they know the markets," commented Huntsman. "It is natural that we should work together. It would be a shame if that does not happen."

Huntsman sees India as a junior version of China - a "tough and unique market" - where a business model developed in the US will not be successful. However, it is a market that he says cannot be ignored.

"It has got challenges. But if we did not have a base in India today, then it would have been too late," he points out.

For more on Huntsman, visit our Company Intelligence site

By: Malini Hariharan
+65 6780 4359

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