Dynasol adapts global experience to local needs

Liaoning North Dynasol Synthetic Rubber Co. Ltd. (LND), the 50:50 joint venture between Dynasol and Shanxi Northern Xing'An Chemical Industry Co., Ltd., has recently begun operation in the city of Panjin, Liaoning Province. The facility has a total production capacity of 100,000 metric tonnes of SSBR/BR/SBS. Xing'An, part of the state-owned diversified business corporation CNGC, will secure the key feedstock for the joint venture, through an affiliate petrochemical complex in Panjin. Just days after the Panjin plant started running, LND executives – Asia Sales Director Raul Olabarrieta, Technical Service Director Enrique Montero and Asia New Business Development Director Matias Miao, – sat down with International Plastics News for Asia (IRNA) at Chinaplas 2015 to tell us about this newly fledged operation.

 

IRNA: When was the decision to set up operations in China made, and what circumstances made the proposition attractive at that time?

Mr. Olabarrieta: Actually, the idea – but not the decision – came about more or less in 2005 and 2006, when there was a shortage of supplies, mainly SBS, in China. There was a boom in consumption because of massive infrastructure development but there was a shortage of SBS for asphalt modification. The regulations imposed by the Government for infrastructure development, similar to those in the U.S. and Europe, also meant there were not enough quality material capacity in China to build high-speed roads, for instance, to fill the demand. It was at this time, amid this fast-growing consumption and shortage of supply even with imports, that we began looking for possible partners.

Strategically, wherever we do business, there are three main drivers in the synthetic rubber business in general. First, to assure the raw material supply; secondly, have a partner agreement; and third, establish a convenient and stable pricing formula focused more on contract pricing rather than spot pricing.

 

IRNA: Given these drivers, what was the process like to find the right partner?

Mr. Miao: I like to describe the process of finding the right partner as the 'long march'. We began the search some time in 2005, first met our current partner in 2008, and closed the negotiation in 2011. In tying up with CNGC, we have found a reliable supplier of raw material and partner. We are not as big as some local peers with their facilities of bigger capacities and integrated upstream operations; we are medium-sized so we need to be more dynamic and fortunately, our local partner has the same view. Although the partnership is between two quite different entities, a Chinese state-owned company on the one hand and a Spanish-Mexican joint venture operation on the other, we share the same goal: we would like to be one of the most reliable, innovative and market-oriented specialty polymer companies operating in China.

 

IRNA: What is the status of the plant in Panjin?

Mr. Olabarrieta: We have started up with a “reaction” polymerisation two days ago, but we will have the formal opening in September. So we are already on operating mode. The main geographical market that we will serve is of course, China, but our 100,000 MT capacity can serve all of Asia. Based on our projections, we expect to be at full capacity by 2017 or early 2018, depending on the market situation.

 

IRNA: What markets in Southeast Asia are you active in?

Mr. Olabarrieta: There is a growing market in Southeast Asia for several of our products, including technical elastomers. Our main markets in this region are Indonesia, Malaysia and Thailand. And when our global customers set up operations in countries like Vietnam or Myanmar, then we follow them – with a view that even without existing infrastructure or development, we can still support them.

 

IRNA: What market applications are you targeting with your products?

Mr. Olabarrieta: We are avoiding the commodity sector, but rather more focused on value-added sector – not only with our global accounts that are active in China or elsewhere in Asia, but also with local companies that are producing and exporting their high value products and require our technical compounds and adhesives.

 

We will remain active in other applications, such as asphalt, plastic modification like ABS and polystyrene resins and styrene copolymers, and with the future view of entering other sectors, such as low rolling resistance tyres. This is

something we have in the back of our mind and that we have developed in the western markets, but we are waiting for the right time and opportunity to introduce these solutions in China. When the market and regulatory environment is right, we can enter with this new family of products. To serve this high-value applications sector, we will offer the same expertise, support and technical service in China that we offer in our other geographical locations in America and in Europe.

 

IRNA: What do these services and support entail?

Mr. Montero: In Dynasol, we consider our new China operation as a daughter or a younger sister, so it's part of the Dynasol family and the same policy applies to China as in our other regional operations. This means we will also work closely with our customers in order to understand their needs and for this purpose, our technical service laboratory and technical service engineers in Shanghai will function in the same way that our other labs in Europe and America operate – only with much newer equipment, which are installing at this moment. One of the most important services we will offer is developing formulations and we also offer troubleshooting services for technical compounds, adhesives and vulcanized goods. Our staff have been trained in the U.S., Mexico and here, and most have background or experience in engineering polymers, although not necessarily the same kind of polymers.

 

IRNA: What sort of challenges do you expect to encounter from customers seeking your assistance? 

Mr. Montero: Basically, I think the customers the world over have the same challenges, and we will take the same approach to work with them so they achieve their goals. Customers who have been exposed to the western market will require more, of course, to meet global standards.  

 

Mr. Olabarrieta: I think that the goal will be how to improve the product; how to improve quality since many Chinese companies are serving export markets and must meet international standards and regulations, and impose the same

restrictions on their suppliers. As a result, high-value products made in China are gaining a better reputation. 

 

Mr. Miao: And also the domestic market is getting more sophisticated and they have higher standards to suit a better, higher quality of life, so domestic companies need to produce better quality products to remain competitive.

 

IRNA: What have you taken from the process that began almost 10 years ago?

Mr. Olabarrieta: No matter how many times you have visited China, if you are not living and working here then you cannot act locally. You have to be willing to put on the boots of the other to adapt and adjust. That's also the reason that Dynasol takes this as a good opportunity for us to take our global experience and adapt them to local needs and situations – and we refer to this concept as 'Glocal'. Our concept is to build a robust operation and a robust facility; not to build it fast, but to build for the long term. Adjust to market needs, trends, economic environment and government policies – we must be flexible, and we are clear that we will adapt and adjust.

 

 

Liaoning North Dynasol Synthetic Rubber Co. Ltd. (LND)

Tel: +86-21 5018 8678

Fax: +86-21 5018 8766

E-mail: mmiao@dynasol.com.cn

Website: www.dynasolelastomers.com