German chemical producer Lanxess has started production at its new ethylene propylene diene rubber (EPDM) plant at Changzhou in China's Jiangsu Province. Over the next several months, the company said it will be running sampling and approbation processes with customers. The new 160,000 t/y plant in Changzhou Yangtze Riverside Industrial Park, said to have access to "excellent storage and ship uploading facilities," will produce ten premium grades of EPDM tailored to Chinese and Asian customers' needs.
With the gradual ramp-up of the new facility to its nameplate capacity, Lanxess said it will "complete" its global EPDM asset base. In fact, with the planned shutdown of the 70,000 t/y EPDM plant at Marl, Germany, by the end of this year, output will actually be reduced.
In announcing the planned closure simultaneously with publication of its annual results for 2014, in mid-March the Cologne-based company said the Marl plant is "the least competitive in its EPDM production network, due to its poor economies of scale and relatively high energy and raw material costs. Some 120 jobs will be slashed in the move.
Excessive investment in an oversupplied rubber market - in which Lanxess is the leading player - has been blamed for the dramatic profit slide that led to the forced resignation of former CEO Axel Heitmann in early 2014 and the subsequent departure of managing board member Werner Breuers - who had responsibility for the group's Performance Polymers business - in August 2014.
"We still have significant overcapacity" for synthetic rubber, current CEO Matthias Zachert said at the annual results press conference. For 2015, he said the business will remain "challenging." Earnings of the Performance Polymers segment, which also includes engineering plastics, are expected to be in line with the 2014 figure of 808 million.
