07 May 2012 00:00 [Source: ICB]
Anticipating a return of China's economic growth, suppliers are making investments
China is where all the major polycarbonate (PC) activity is these days, with many companies, including some very large producers, taking a greater interest in the region and doing serious investing.
"In 2011, 60% of the global polycarbonate market was in Asia-Pacific, and China occupied 50% of that," said Michael Koening, head of the polycarbonates business unit of Germany-based Bayer MaterialScience (BMS).
China is "the most important market," added Koenig, speaking from the sidelines of Chinaplas 2012, an industry exhibition held in Shanghai in April.
The ID card industry is a growth sector for PC
Copyright: Bayer MaterialScience
China produced only 220,000 tonnes of PC in 2010, importing most of the 1.13m tonnes consumed by its industries, the company noted.
SABIC and BMS are two of the larger investors in China. But others are also increasing their PC footprint in the area, including LingYou Engineering-Plastics of Shanghai, which plans to start commercial production at its new 80,000 tonne/year PC plant at the Shanghai Chemical Industry Park (SCIP) in Caojing, China, in May. LingYou is a joint venture between Japan's Mitsubishi Gas Chemical and Mitsubishi Engineering Plastics. Meanwhile, Germany's Albis Plastic will spend roughly €10m ($15.9m) to build a nylon and PC compounding facility in Changshu near Shanghai.
The company said construction of the facility is in response to European customers' demand for more PC production in the region. "We expect an annual growth in the demand for technical plastics in China or around 14% over the next few years," said Albis CEO Jorg Schottek in a press release.
Other PC construction projects in Asia include Thailand's PTT Global Chemical project to build two world-scale crackers, one of which will be dedicated to PC production downstream, for start-up in the next few years; and Samsung Cheil Industries, a subsidiary of Korea's Samsung Group, planning to complete a new 80,000 tonne/year PC unit at Yeosu, Korea, in August.
THE UP CYCLE
China's PC demand is expected to return to its normal growth rate of 7-8% this year if European economic conditions do not worsen, Koenig said.
"I do believe that the polycarbonate market, which had a bit of a quiet period in a sense of not-so-much growth last year is somewhat on its way back to the normal growth rates," said Koenig.
PC is a "very cyclical business that follows so closely economic cycles," he added.
This year, BMS is expected to approve the construction of two 100,000 tonne/year PC plants at SCIP which are estimated to start up by the end of 2014, and is part of a €1bn investment plan for the Bayer Integrated Site Shanghai.
BMS will also expand its existing 200,000 tonne/year PC plant at SCIP to 300,000 tonnes/year after starting up the two new plants, Koenig added.
BMS's plan to expand the capacity at its 270,000 tonne/year PC facility in Map Ta Phut, Thailand, via debottlenecking is waiting for corporate approval.
BMS also has plans for PC beyond China. In early April, the company said it would acquire for an undisclosed price the PC sheet business of France-based Arkema, which includes the Tuffak line of products used in the aerospace, transportation and heavy equipment markets.
"This acquisition will support our strategic initiative to establish polycarbonate sheet as the product of choice in the security glazing, mass transportation and signage markets," said Thomas Karl Kastner, global head of BMS's sheet business.
SABIC notes that while PC may have suffered in the public relations arena lately because of fallout from the bisphenol-A (BPA) controversy, usage of the material will continue to grow in excess of GDP, especially in automotive and electrical/electronic applications.
At the beginning of April, the company began construction on its joint venture with China Petrochemical and Chemical (Sinopec Group) to build a new $1.7bn, 260,000 tonne/year PC plant at the Sinopec-SABIC petrochemical complex in Tianjin.
SABIC first revealed this plan in May 2011, and said the plant will be operational by 2015.
The joint venture, which covers marketing, allows SABIC to supply PC as feedstock to the company's other plants in China and the Pacific region.
SABIC has a "solid commitment to helping our customers' growth and success in Asia and around the world," said Lennard Markestein, global film portfolio and North Asia director, for US-based SABIC Innovative Plastics. "SABIC actively supports our Asian customers to ensure a steady and reliable source of our films."
Markestein made his remarks during a press conference in early April for new brands of SABIC PC.
NEW MARKET IDENTIFIED
Once profitable, the PC end-market of CDs and DVDs is dwindling because of consumers switching to on-line and streaming media. PC suppliers have had to find new applications to pursue.
One potential revenue stream is the burgeoning identification (ID) card sector. In April, both SABIC and BMS launched new brands of PC specifically for this industry.
SABIC has unveiled two Lexan film technologies for ID cards. These help to simplify the manufacturing processes that were complicated because of the increasing number of thinner layers with security features designed to combat identity theft and counterfeiting.
Meanwhile, BMS is offering its existing anti-scratch Makrofol ID 320 film in a laser-engravable version, which simplifies card construction, as well as improving the level of the film's security capabilities.
This new film can be laminated similarly to conventional PC films, but cards made with the Makrofol film do not require additional layers of laser-engravable film.
PC is "non-delaminable" and the many layers of materials make the ID documents fuse into a single solid card.
With additional reporting by Wesley Busch in Houston; and Chow Bee Lin in Shanghai
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