Growing alongside the synthetic rubber market

February 26, 2012

Growing alongside the synthetic rubber marketBEREFT of oil resources, Taiwan has successfully emerged as a petrochemical titan and currently ranks the ninth largest producer in the world. However, the country’s dependence on crude oil supply has made it vulnerable to pricing fluctuations. Thus, by value adding oil-related products it has managed to secure market leverage and perpetuate a miracle economy legacy. Taiwan Synthetic Rubber Corp (TSRC) is a company that was born out of this strategy. PRA spoke to President/CEO of TSRC, Tu Wei-Hua, to ascertain its business activities.

Asia a major growth driver

Set up in 1973, TSRC, the largest synthetic rubber (SR) manufacturer and supplier in Taiwan, was established by Glyn TH Ing to support the government’s policy on developing the country’s petrochemical industry. Today, it has an output of 600,000 tonnes/year of SRs like SBR, BR, NBR, TPE and TPE compounds and had a group turnover of US$18 billion last year, a record in its history.

Asia continues to serve as a key growth driver for the SR market and for TSRC, with the automotive sector as well as non-rubber finished goods sector demonstrating optimistic growth. With vehicle growth to skyrocket in China, the country is an important investment destination for the firm and it is no surprise that its output and sales have already surpassed those of its home base of Taiwan.

Said President/CEO of TSRC, Tu Wei-Hua, “Around 60-70% of our SBR and BR outputs are exported to Asia.
Over the years, we have been actively expanding our overseas business and the supply network is well built. Despite the stalled economic growth in European and American countries, the emerging markets in Asia have
been developing rapidly.”

In terms of ESBR, it has a production capacity of 100,000 tonnes/year at its Kaohsiung plant in Taiwan while a
Chinese joint venture between Japan-based Marubeni and Nantong Petroleum & Chemical Corporation, Shen-
Hua Chemical Industrial, produces 180,000 tonnes/year in China.

To meet the growing demands of clients and to increase its competitiveness in the Asia Pacific market, TSRC has aggressively built up its supply network in China. For example, TSRC-UBE (Nantong) Chemical Industrial, a joint venture of TSRC, Japanese UBE Industries and Marubeni based in Nantong, Jiangsu Province, is increasing its capacity from 50,000 to 72,000 tonnes by this year.

In terms of BR, it has a 60,000-tonne/year plant in Kaohsiung while a joint venture in Thailand, Thai Synthetic Rubber, with Japanese firms UBE Industries and Marubeni, offers an additional output of 72,000
tonnes/year.

Meanwhile, recognising the double-digit growth expected for NBR in China, TSRC has co-invested in a US$50 million Chinese joint venture with German chemicals firm Lanxess. Situated in Nantong, the plant is expected to start up in the second quarter of 2012 with a capacity of 30,000 tonnes/year of NBR.

TSRC has also been firming up its market entry into India. Last year, together with Marubeni and Indian Oil, it inked a partnership to form Indian Synthetic Rubber, which has already started work on the 120,000 tonne/year-SBR plant in Panipat, Haryana. The project is being constructed near a naptha cracker that will supply the raw material butadiene.

When the plant starts commercial operation in 2013, TSRC says it will allow it to claim the title of
“sole supplier” in the country.

Technology key to competitiveness

When asked how the company has managed to attain its leadership in the industry, Tu explains, “TSRC’s applied polymer business has a long history of operating in the SBS, SIS, SEBS and TPE compounding segments to accommodate various customer needs. We enjoy a unique competitive advantage in customised products.”

And in recent years, TSRC has been actively expanding its rubber development niches through collaborations with international players. The company has worked with Japanese firms UBE Industries and Marubeni on its BR plants; stateowned Indian Oil and Marubeni on the ESBR plant and with Lanxess on its NBR plant.

TSRC has also been acquiring technology. The recent acquisition of US-based styrenic block copolymer (SBC) producer Dexco Polymers is intended to launch TSRC into the SBC market and place it in the top five global players ranking in the business. “The acquisition will enhance our global competitiveness as well as allow us to develop more differentiated and higher value-added products for our customers,” adds Tu.

To extend the upstream value chain, at the end of last year, TSRC set up a US$286 million joint venture with CPC Corporation and Fubon Financial Holding Venture Capital, known as Taiwan Advanced Materials, to build a C5 separation, SIS and tackifier plant.

There are only around ten companies in the world engaged in C5 petroleum resins products. “It is a significant step for Taiwan’s petrochemical industry to move towards a high value-added cooperation model among upstream and downstream players,” says Tu. Moreover, SIS, which can be used for medical products and highquality adhesives, currently fetches high market value, according to Tu.

To start up by the end of 2013, Taiwan Advanced Materials is projecting a turnover of NT$5.8 billion/year.

Green mobility drives growth

A burgeoning demand for “green” tyres enforced by consumer consciousness and the labeling system of tyres in key countries in Asia and Europe is harbinger to the company adding on new elastomers to its portfolio.

Since SBR clinches the largest segment in the SR market to produce tyres with characteristics such as improved abrasion resistance, safety and fuel efficiency, all of which are now favoured in the market, TSRC has started mass commercial production of SSBR for high performance and energy-saving tyres.

SSBR is used in the tread of “green” tyres to reduce rolling resistance whilst improving wet grip. Moreover, it can decrease fuel consumption by an average of 5 to 7%, thus reducing CO2 emissions. Tu explains, “The properties of SSBR differ from traditional rubber as it can be customised according to the processing and application demands. SSBR is mainly used in energy-conserving (low rolling resistance), high performance, and all-season tyres.”

He also says that in preparation for the increasing demand of SSBR, last year, TSRC commercialised a SSBR production line in Taiwan with an output of 30,000 tonnes/year.

TSRC is also working on a project aptly known as “Energy-saving, Eco-friendly Tyres, Material & Applied Researcher Alliance Project”. But the company is not disclosing details of the project at the moment.

“TSRC has put in every effort possible in the industry for many years and now has finally created a new global channel,“ says Tu. “As a leader in Asian rubber industry, TSRC will continue to move forward and strive to enhance the quality of human life,” the executive concludes.(PRA)

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