Butyl Rubber from LANXESS
Brings Forward Record Investment in Singapore
Dr. Ron CommanderGlobal Head, Butyl Rubber business unitMedia Briefing in Singapore, January 18, 2010
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This presentation contains certain forward-looking statements, including assumptions, opinions and views of the company or cited from third party sources. Various known and unknown risks, uncertainties and other factors could cause the actual results, financial position, development or performance of the company to differ materially from the estimations expressed or implied herein. The company does not guarantee that the assumptions underlying such forward looking statements are free from errors nor do they accept any responsibility for the future accuracy of the opinions expressed in this presentation or the actual occurrence of the forecasted developments.No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, none of the company or any of its parent or subsidiary undertakings or any of such person’s officers, directors or employees accepts any liability whatsoever arising directly or indirectly from the use of this document.
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The Business Unit Butyl Rubber –part of the LANXESS Performance Polymers segment
A leading producer of butyl rubber Sarnia, Canada
Butyl Rubber is one of four business units in the Performance Polymers segment
Sales: > € 500 million per year
Current production sites: Zwijndrecht, Belgium and Sarnia, Canada
Total future production capacity: 380,000 tons*
Sales in 45 countries
LANXESS Butyl Rubber – A growth business
* Zwijndrecht, Sarnia and butyl rubber plant in Singapore (from 2013 onwards)
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Overview of butyl rubber applications –innovative products mainly for tires
LANXESS provides butyl rubber, which is impermeable to airTwo product groups: Halobutyl and Regular ButylTechnology and know-how are crucial to success in butyl rubber marketCustomer industries dominated by tires (inner-liners and tubes)Non-tire applications include:
- Pharmaceutical stoppers- Chewing gums- Protective clothing- Soles of shoes
Tire: 84%Pharma: 5%
Gum: 4%
Construction: 4%
Automotive: 1%
2008 end uses Main applications
Non-tire
Tire
Adhesives: 2%
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Non-tire business gains importance –diversified customer base
* Source: www.marketresearch.com
By 2013 global pharma packaging demand rises by 5.3% annually*China with strongest growth opportunities: extensive government program to upgrade quality and integrity of nationally produced medicinesComparable programs under discussion in India
2008 2010
Tire: 84%Non-tire: 7%
Pharma: 5%Gum: 4%
Tire: 76%Non-tire: 9%
Pharma: 11%Gum: 4%
Rise in demand for LANXESS’ butyl rubber from pharma applications
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Regional shift of demand –butyl rubber business moves to Asia
44%2000
2005
2009
2010
Americas
EMEA
APAC
Growing demand for LANXESS’ butyl rubber in Asia
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New butyl rubber capacities are needed to serve the growing demand, especially from 2013 onwards
Butyl rubber has historically tight supply
LANXESS has been sold out of butyl rubber in the last years
Even in the crisis, demand for butyl rubber rebounded as of Q3 2009
LANXESS is a leading producer with state-of-the-art technology
Source: LANXESS estimates 04 2009; Market demand study from LANXESS
Butyl rubber market overview
Start of production 2013
Global nameplate capacity
Demand
Production @ 90% capacity utilization
2000 2002 2004 2006 2008 2010 2012 2014 2016
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A leading producer of butyl rubber
Global butyl rubber market to grow by more than 3 % annually
Key drivers & trends
- Main driver remains the tire industry
- Tire growth mainly in BRIC countries
- Continuing trend to radial tires in Asia, particularly in China and India
- Contribution of important niche applications in healthcare and food industries
Growing market for butyl rubber
Source: LANXESS butyl market research study
Markets demand more butyl rubber
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Global tire production trend
Tire unitsproduced
2008 2010 2012 2014 2016 2018 2020
CAGR 5.6%
CAGR 1.1%
CAGR 2.5%
CAGR 8.8%
CAGR -1.2%
CAGR 5.9%
Sustainable tire growth dominated by BRIC countries
ChinaIndia
Other APAC
EMEALATAM
NAFTA
China strongest growth driver with almost 9% annual growth
India gaining importance
LATAM follows with growth rates close to 6%
Major tire producers invest in new capacities to serve growing demand – focus is on high performance tires
Asia as growth driver
Source: LMCQ3 2009 and LANXESS estimates
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Planned capacity expansions of selected tire producers –companies focus on BRIC markets
New plants in China and India~€1.300 m investmentNew plant in Brazil€300 m investmentIncrease capacity in Russia2 million tires/year
BridgestoneIncrease capacity in Thailand~€75 m investment/ ~2.0 m tires/yearIncrease capacity in China~€67 m investment/ ~1.3 m tires/year
New plant in Hungary€230 m investment/ 10 m tires/year
Source: Company websites
New plant in China€185 m investment~4 m tires/year
New plant in Russia~€250 m investment~4.2 m tires/year
New plant in China~€52 m investment~2.1 m tires/year
New plant in China~€72 m investment~2 m tires/year
New plant in Taiwan~€250 m investment~5.5 m tires/year
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Transportation and mobility in Asia lead to an increasing radialization rate for truck tires
0%
10%
20%
30%
40%
50%
60%
70%
80%
1990 1995 2000 2005 2010 2015 2020
China
Radialization rate for truck tires
India
All radial tires contain a Halobutyl inner-liner Due to increasing transportation in Asia, truck tires gain more importance
China’s focus on improvement of road infrastructure fuels radialization trend of truck tires (CAGR 1995 – 2013) ~16%
Trend started as well in India: High growth potential due to only 10% - 12% radialization rate for truck tires in 2010
More radial tires trigger rising demand for halobutyl
Source: www.bekaert.com, LANXESS market intelligence
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Key facts:
Record investment in Singapore
Groundbreaking in May 2010
Production to start in Q1 2013
Front End Loading is completed
To restart negotiations with utilities providers and other third parties
LANXESS butyl rubber plant in Singapore –brings forward plans for construction and production
LANXESS to build world’s most modern butyl rubber plant
Singapore
Jurong Island
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Core project team of 20 people
Hiring of plant personnel to start very soon
200 positions for chemical engineers, mechanical engineers, chemists and chemical process workers
Hire locally and regionally
Key plant personnel to be trained in Sarnia, Canada or Zwijndrecht, Belgium
LANXESS butyl rubber plant in Singapore –hiring situation
Hiring and training of plant personnel to start soon
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LANXESS global Butyl Rubber headquarters –moves to Singapore
New office to be opened in Q2 2010
Headquarters to have 35 personnel in the course of 2010
Key functions include marketing, controlling and supply-chain
New Butyl Rubber headquarters
LANXESS in Fribourg, Switzerland
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Value creating investment in a premium business
LANXESS
Largest investment in company’s history
Plant to locate close to major Asian growth markets and customers
Underpins LANXESS’ position as a leading butyl rubber producer
Strengthens Performance Polymers business segment and LANXESS’ total profitability
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