Songwon building up expertise in speciality chemicals

Songwon Industrial, the second largest manufacturer of polymer stabilisers in the world, serving 30% of the market, is on target to building up its portfolio in speciality chemicals, said Maurizio Butti, CEO of Songwon, speaking at a pre-K2016 press conference, held in June in Brussels, Belgium.

With the year 2015 being its 50th anniversary, Butti likened it to be a turning point for Songwon. “We would like to enter the second 50 years even stronger,” he said.

To make the transition from a global additive supplier to a “real” speciality chemicals company by 2020, it expects to increase its focus in specialities to a majority part of its sales. Its aim is also to have sales of 900 KRW million by 2020.

It is doing this by establishing new businesses to fuel profitable growth. “We have a strong R&D team that is even busy now.”

Butti says that company has strong competencies in product synthesis and development and have a lot of products that can be used as starting points for the plastics market; as well as have a strong asset base in Korea and India.

In India, at its Panoli plant, he said, “We are considering to build a pilot plant to develop specialities to support the rest of the development. But we have not decided what to produce as yet.” Currently, it does produce electronic chemicals in India.

It has two new businesses in the lube market, in terms of its existing range of AOX (liquid and solid). “Market demand is growing because of new standard for engine oils and especially in Asia, there is room for a new player.”

The other new business is its cooperation agreement with Heraeus to jointly develop and market high end speciality chemicals for the electronics industry. It combines Songwon's expertise in R&D and chemical manufacturing with Heraeus's technical capabilities and experience in the electronics chemical industry, thereby broadening both companies' access to the global electronics market.

“Being located at the heart of the Asian electronics industry with our long tradition of manufacturing high quality specialty chemicals, Songwon is perfectly positioned to contribute to the success of this exciting co-operation.” explained Butti.

In terms of business, it has done “very well”, said Butti. Sales in Q1 totalled 183,074 million KRW; gross profit increased over 2015 to 51,185 million KRW and gross profit margin was up by 28%.

In 2015, the company expanded the plant in Panoli, which it bought in 2014, from making just antioxidants and expanded to electronic chemicals. It also completed its OPS facility in Abu Dhabi, started up early this year. With an initial capacity of 7,000 tonnes/year and designed for future expansion, this latest addition has the identical production technology as Songwon’s two other plants located in Greiz, Germany, and Houston, US.

With its jv partners, Songwon currently has two manufacturing facilities in China. Fully back integrated with a capacity of 8,000 tonnes the first one is located in Tangshan and produces high quality thioester antioxidants for the Chinese market, as well as other key regions.

The second world class facility, currently in the final stages of construction is dedicated to the production of Songnox One Pack Systems (OPS). Located in the Qingdao area of Eastern China, it is due to be fully operational in Q3/2016.

The company is a leading supplier of OPS -- multi-component tailor-made blends of additives in a pellitised form that are packaged in a clean, dust-free environment, ready for shipping.

“We will continue to focus more on the American market; establish a strong position with our joint venture partner in China and build a leading market position in India as well as become a key player through the OPS investment in Middle East.”