Lanxess to spend $1.5 billion on specialty chemical capacity expansions

New synthetic rubber plant announced in Singapore as France expansion completed.

By Dave Hannon -- Purchasing, 2/28/2008 7:28:00 AM

German specialty chemicals supplier Lanxess is spending $1.5 billion in the next three years to increase global production capacity.

Lanxess CEO Axel Heitmann told reporters about the plans while in Singapore to unveil plans for a new $575 million synthetic rubber plant that is expected to produce up to 100,000 tons of butyl rubber annually beginning in 2011.

“By setting up this new location in Singapore, Lanxess is responding to the significant growth in global demand for butyl rubber,” Heitmann said. “Market analyses confirm that the global market for butyl rubber will rise steadily in the coming years. Growth is most pronounced in China, where it corresponds to 6% annually, and in India, where it is more than 8%.” Bloomberg reports that Shell Eastern Petroleum will supply the raw material for butyl rubber production at the plant through an 800,000 ton/year ethylene plant currently under construction in Singapore slated for operation in 2009 or 2010.

Heitmann said the region will account for more than half of the world's butyl rubber demand by 2013, as Asian countries increase automotive tire production. Singapore is rapidly becoming the main supply region for those materials in Asia. Output by Singapore's petroleum, petrochemicals and specialty chemicals industry reached $58 billion last year, according to Aw Kah Peng, assistant managing director of the Singapore Economic Development Board, who Bloomberg reports spoke at the Lanxess press conference announcing the new rubber plant. The petrochemical industry accounted for 34% of Singapore’s manufacturing output—more than its electronics industry—in 2007.

Lanxess also this week announced it has completed a 20% expansion of its production capacity for XNBR (carboxylated nitrile-butadiene rubber) at its site in La Wantzenau, France.  

Heitmann also told reporters that Lanxess has been able to pass on record high materials costs to buyers. “It has been our company policy to pass on higher raw material prices into the market in a timely manner,” Heitmann told Reuters. “We have been very successful in doing that.”