German speciality firm Lanxess has invested over EUR500 million to upgrade its global butyl rubber manufacturing units in Canada and Belgium and build a brand new facility in Singapore, adding around
200,000 tonnes/year of capacity in total. It is expecting to focus a large part of it to the expanding Asian economies, which account for about a quarter of its total group sales. The Asia Pacific region is also a prime mover for the mobility megatrend growth, and thus is propelling demand for butyl rubber, which is estimated to have a growth of 6% a year.
Lanxess’s butyl rubber sales in Asia represent more than 50% of its worldwide sales of the rubber of over EUR500 million. The region has the strongest growth potential, with increasing passenger mobility as well as a growing middle class and improved access to medical care, thus underscoring the urbanisation trend, says the company. Added to this is the global trend of radial, tubeless truck and bus tyres, all factors that should bode well for the rubber material market.
Debut of BTR plant in Singapore
The recent opening of Lanxess’s butyl rubber (BTR) plant in Jurong Island, Singapore, marks its pioneering presence in the region. The Singapore facility, which is claimed to be the most modern of its kind in Asia, joins Lanxess’s existing butyl rubber plants in Sarnia, Canada, and in Zwijndrecht, Belgium, both with nameplate capacities of 150,000 tonnes/year. This means that the
speciality chemicals company now has three state-of-the-art BTR facilities on three continents.
The debuting plant’s premises for premium halobutyl and regular butyl rubber production feature 3,500 tonnes of steel, 350 km of cabling and 80 km of piping. The EUR400 million plant has also created about 160 highly qualified new jobs for locals.
The plant was engineered and constructed by Foster Wheeler Asia Pacific on a 150,000 sq m plot on Jurong Island, leased from the JTC Corporation, a statutory board under the Singapore Ministry of Trade and Industries.
The butyl rubber facility went into operation in the first quarter of 2013 and is being ramped up
gradually. Commercial production will start in the third quarter of this year with full capacity to be
achieved in 2015.
“This is the largest investment in the company’s history. It underlines the importance of Asia as a
location for our synthetic rubber business,” said Dr Axel Heitmann, Lanxess’s Chairman of the Board of
Management, during the opening ceremony. “We have clearly built this plant with the future of mobility in mind because we think and act long-term.”
Heitmann also said the purpose of building the plant was to ensure that the company’s valued customers in
this region have reliable access to a steady supply of high quality butyl.
“We can continue to provide them with all the materials they need without regard for the costs or uncertainties of transoceanic shipping,” said Dr Ron Commander, Head of the Butyl Rubber business unit of
Lanxess, adding that it is the world’s first entirely new halobutyl plant to be built since 2000.
Dr Werner Breuers, Member of the Board of Management, Lanxess, said that the 100,000 tonnenameplate
capacity of the plant will be dedicated on producing halobutyl and regular butyl, depending on the
market requirements.
The firm, which noted that only very few manufacturers worldwide have mastered the production of the two halobutyl rubber types of bromobutyl and chlorobutyl rubbers, sees the region’s demand expanding further. It is also eyeing increasing demand from Indonesia, Malaysia and Thailand, said Commander.
The tyre industry is the most important market for halobutyl rubber, which is used to make air-tight inner liners in tubeless tyres for cars, trucks and buses and high-end two wheeler tyres.
Regular butyl is used in tubes for bias tyres, two wheeler tyres and in inner balls of sports balls,
like soccer balls and basket balls, which require retention of pressurised air.
Breuers added that South Korea is also an important market for the firm, especially tyre maker Hankook that is a loyal customer, despite the torpid market situation.
New benchmark for sustainability
In integrating sustainability into the new BTR plant, the company says it has set new standards, in terms
of environmental protection. This is achieved through reductions on energy and water consumption and
emissions.
The manufacture of butyl rubber is highly complex and involves process steps at temperatures ranging
from minus 100 to plus 200°C. The firm says the current production process used for butyl rubber has been
upgraded and has been implemented at the Singapore facility. This involves investing around 10% of the
total investment towards technologies that make the butyl rubber plant more environmentally friendly.
For example, significantly less steam is used in the manufacturing process than in comparable facilities, leading to lower energy consumption.
Chemical compounds from the production process are treated in thermal off-gas units, so that the environment is not affected.
“This process is evidence of our global leadership in rubber manufacturing. I am very proud that we
are setting new standards in the industry,” said Commander.
Singapore, a strategic manufacturing base
One of the reasons why Lanxess selected Singapore as its base is that the country has an estimated 100
key global petroleum, petrochemicals and speciality chemicals firms located on Jurong Island. The latter
location is Singapore’s energy and chemicals hub and companies have located their operations (mostly
manufacturing sites) here, generally due to its plug-and-play infrastructure, which enables firms to access shared third-party utilities and services for cost-effective operations.
This is further augmented with the upcoming implementation of the government-initiated Jlv2.0 (Jurong Island Version 2.0), an initiative that adopts a holistic government effort. It is to enhance the location’s competitiveness and sustainability in the five core areas that include energy, logistics and transportation, feedstock options, environment and water.
Singapore’s Deputy Prime Minister, Coordinating Minister for National Security and Minister for Home
Affairs, Teo Chee Hean, noted during the plant inauguration that Lanxess aims to grow its Pan-Asian
business through Singapore’s focused efforts on the chemicals sector.
Commander said that foremost, Singapore has a secure raw material supply. For example, the company
has secured the long-term supply of isobutene, an important raw material for butyl rubber production,
from a neighbouring plant.
And although the supplies are not transportable within the island, they can be “transferred” via pipelines
and through the use of a highly skilled workforce.
Last year, Lanxess also started construction of a new production facility for neodymium-based performance
butadiene rubber (Nd-PBR) on Jurong Island. The direct proximity of these two plants creates valuable
synergies for the company, for example, through joint infrastructure and logistics.
Commander also mentioned that Lanxess is able to operate on a 100% ownership in the country, meaning
that it does not have to share its knowledge and proprietary technologies with other parties.
Another reason for choosing Singapore for the plant is its ideal location. “Singapore is now the hub of our Southeast Asian operations, taking its place as an even more important pillar of our global rubber production activities,” he said, adding that the company had also moved its butyl rubber headquarters from Switzerland to Singapore in 2010.
China is a growth backbone
China is undoubtedly the current biggest market this side of Asia, accounting for about half of Asia’s 50% demand of the overall global butyl rubber sales for Lanxess.
The country, along with India, is considered by Lanxess to be the growth engine for mobility. China’s
passenger car ownership is expected to more than triple to 450 million units over the next 15 years, with about a 10% CAGR for both countries from 2012 to 2013, citing data culled from economic and business consultancy LMC International’s 2012 report.
And while the current slow down in China may seem to be a deterrent for industry producers and
manufacturers, the German chemicals firm views the situation as temporary.
China may no longer grow between 11%-12% and may only achieve a target of 7% this year, said
Commander at the inauguration of the Singapore facility.
The decline, however, still points to a healthy growth, Commander continued, adding that many economies in
the world would “still be happy” to reach that growth percentage.
The overall sluggish Chinese economy was also a point raised by Breuers. He echoed and agreed with
Commander that the company views this as a temporary phase as the country is in an economic transition.
“It may be hard to predict for how long (the sluggish economy situation) it will last, but we see it recovering in the first half of 2013 through 2014,” Breuers told PRA during the press conference.
Heitmann also emphasised in his remarks during the opening ceremony that Lanxess “takes a long-term view
of things” and that “(it is) not discouraged by the current weakness in demand, which we view as temporary.”
The Singapore BTR plant is, thus, now in a better position to serve the region, said the Lanxess officials, including its topmost customers from China, where the company has ten wholly owned subsidiaries, three joint ventures and six major R&D centres. It will also serve India, where Lanxess has manufacturing units for six of its business units.
Reaching across non-tyre segments
Rubber also figures in various other applications and Lanxess’s innovations span across industries that can benefit from the application of its high-end rubbers.
The firm said that halobutyl rubber, which is ideally used for inner liners of modern tyres, can also be used in pharmaceutical closures due to its non-toxicity, physical and chemical properties, good resealing after puncturing and resistance to ageing.
The special-purpose rubber is also required by law in some Asian countries, for example in China, for use in pharmaceutical applications. The country’s ranking, by consumption, in the global pharmaceutical sector rose from ten in 2001 to seven in 2009. It is expected to rank second place, after the US, by 2020. Examples of halobutyl rubber-made closures are those used for infusion containers, pipette assemblies and plungers for prefilled syringes.
Some of the world’s biggest pharmaceutical closure manufacturers are based in Asia, hence, it is no surprise that Lanxess has set up a plant for halobutyl rubber in Singapore.
Other applications for butyl rubber are protective clothing, shoe soles, adhesives and chewing gum. Its
impermeability to gas and resistance to chemicals has also proven valuable in vehicle air conditioning systems and tank linings.
Moreover, Lanxess has also developed a new butyl rubber product called butyl ionomers, which it says will
launch new applications for butyl rubber.
Apart from sports grips, improved adhesives and sealants, pharmaceutical closures (or for applications
where pure rubbers are needed), and medical adhesives, butyl ionomers are suitable for use in antimicrobial coatings.
Commander explained that the antimicrobial application for butyl ionomers is especially helpful even
in everyday requirements, such as the rubber handgrips of supermarket pushcarts. Moreover, butyl ionomers can improve the grip on golf clubs, said Commander.
The company also claims to be the only supplier of butyl rubber that is used for the production of chewing
gum.
According to Lanxess’s data for butyl sales by end-use applications, the tyre segment accounts for the largest share at about 75%. The remaining goes to non-tyre segments, including pharmaceutical (approximately 10%), chewing gum (approximately 5%) and other rubber applications (such as adhesives and sealants, condensers, caps, membranes and bladders) at about 10% of overall sales.
Riding the wave of radialisation
There is also a growing trend towards the use of radial or tubeless tyres for buses and trucks in China and India. Based on Lanxess’s presented data, China’s focus on improving road infrastructure is fuelling the trend of radialisation of truck tyres, whilst India shows a high growth potential, given its 17% radialisation rate for truck and bus tyres in 2011 and 2012.
The Singapore plant will be producing both regular and halobutyl rubbers. The latter, the company says, is a more complicated material to manufacture but provides better value to customers and demand for it is growing at a faster rate than regular butyl.
Furthermore, Lanxess has recently developed new technology to incorporate bromobutyl rubber, a type of halobutyl rbber, into tyre treads. This is done to enhance tyre safety by increasing the tyre’s wet
grip and reducing its braking distance. It likewise makes tubeless tyres possible, which Lanxess says “is
extremely important because radialisation is driving the truck and bus market segments in both China and
India.”
Notwithstanding this, the company also sees the market for tyres and inner tubes to continue to represent the leading use for regular butyl and halobutyl for years to come.
“There is a clear trend towards the use of radial or tubeless tyres for buses and trucks in India and China, which is changing the face of commercial mobility. Modern radial tyres require an inner liner made of halobutyl rubber, which helps keep tyre pressure constant for longer because of its impermeability to
gases, thus saving fuel and reducing carbon dioxide emissions,” explained Commander.
“The mobility megatrend is driving demand for this sector,” he said, adding that the market for
vehicles and transport services, especially in the fastest growing economies, has increased rapidly,
and thus is pushing for a steadily growing Asian market for halobutyl.
Heitmann added, “With our high-tech products, we are a leader in enabling Green Mobility.”
The Butyl Rubber business unit is part of Lanxess’s Performance Polymers segment, which recorded sales of EUR 5.2 billion in 2012.