Elastomers focus

23 April 2012 00:00  [Source: ICB]

Capitalizing on its leading position in the elastomers market, the new strategy aims to double revenues during the next few years, through expansion and optimization

With a strong portfolio and a leading position in Europe, the elastomers segment is central to the new plans. Elastomers accounts for 15% of total turnover but the target is to double this within five years, making it the largest in terms of importance. More than €500m ($663m) has been earmarked for the project, says Carmine Masullo, head of the business.

The thriving rubber market will drive demand for the elastomers business

"After a long period without much investment, the company has identified its areas of strength and the elastomers business has been acknowledged as one of the key pillars of our portfolio," says Masullo.

The new plan will consist of several key elements: improving existing plants, increasing elastomers presence outside of Europe and expanding the portfolio through green chemistry.

"It's a substantial program and very ambitious," he says. "The expansion in Europe and growth into Asia are targets for the next three years. The green chemistry depends on new raw materials and products being developed so change will be seen within five years."

ASSET OPTIMIZATION
Its five plants in Europe will see significant investment as part of the program, with their capacities optimized and expanded through construction or debottlenecking.

Masullo says a new solution styrene butadiene rubber (S-SBR) line will be built in Grangemouth, UK, along with an ethylene-propylene-diene monomer (EPDM) line in Ferrara, Italy, new thermoplastic rubber capacity, and an additional S-SBR line in Ravenna, Italy. Construction of the various projects is scheduled to start later this year, with start-up of the first plant expected by the end of 2013.

There are also efforts to reconfigure and improve some of the least competitive output. This phase will see an isoprene plant built in Sicily, to be used as a raw material for rubber production. Further synergy will come via the start-up of a tackifier resins plant at the Priolo site, which will integrate the elastomers product portfolio for the hot-melt adhesive market.

Increasing the unit's global footprint is also essential, says Masullo. The high-growth regions of Asia and South America are being targeted because of strong demand, while there is also potential in the future for expansion in the Middle East, where raw material costs remain extremely favorable.

RAPID EXPANSION
"We have no real footprint in these regions right now, although we do sell into Asia and have some licensing activity there as well. The target is to increase our presence for the production of elastomers there as quickly as possible; all options are open at the moment but it is more likely this will be through joint ventures," says Masullo.

Licensing has great potential for elastomers, he adds, and can prove a useful tool for generating turnover as well as establishing relationships that could potentially lead to collaboration on projects with other players.

Discussions are already underway with potential partners for the elastomers business, and it is expected deals will be finalized later this year.

"Commodities are dying in Europe because of competition from the Middle East and now even from the US because of the shale gas, but elastomers is a fast-developing market and is always changing," he says.

"It is becoming very demanding in terms of performance; there is a space for good companies that have good technology and good product. There has been a lot of rationalization in the last few years with people going out of business."

GLOBAL FOOTPRINT
"We are the leader in Europe - but we are also the ones most dependent on Europe. The market is becoming global and you have to be present everywhere," he says.

"I think that Europe will see a lot of development and we're confident for the future, but for a chemical company to be only in Europe means you will get weaker and weaker in the long term."

Masullo also expects the elastomers business to benefit from the development of a new family of products through green chemistry produced at the Porto Torres site through the Matrica project (see box).

This will see the range incorporate bio-fillers and extender oils to be used in rubber production.

Next article - Effiency targeted

By: Andy Brice
+44 20 8652 3214

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