Ensuring a stable supply of raw materials has become a critical task for success in the plastics processing industry. With that in mind and in light of his company's recent growth, we interviewed Maurizio Butti, CEO of plastic additives supplier Songwon Intl., who has helped oversee a doubling of its sales since 2005.
In recent weeks Songwon (Ulsan, Korea) has announced an agreement to establish a joint venture to manufacture and sell thioester antioxidants (AOs) in China, with China's Tangshan Baifu Chemical Co. Ltd., and to form a joint venture with India's HPL Additives in the field of antioxidants and light stabilizers. The supplier opened an office in Russia in 2008; only Brazil remains if it is to complete a true BRIC (Brazil/Russia/India/China) growth strategy, and the CEO of its European operations says the company's expansion into Latin America is a question of when, not if. Early this year it also opened an office in Bahrain to serve the Middle East and Africa. Further expansion of its product range in China also is in the works, he says, explaining, "Our intention in China is to do the same with other product groups, with other potential partners."
"We're continuing to implement our strategy of globalization...and to now it's worked very well," says Butti. Indeed, the company's sales will hit $500 million this year, more than double the result from 2005. "The market is very strong now," he adds. The supplier is the world's second-largest supplier of antioxidants, and one of the leading suppliers of light stabilizers and other additives.
Just as processors find themselves facing shortages of some materials, so too do their suppliers. Butti notes: "There have been several force majeure in the last months, and pricing (for some raw materials) is rising rapidly." The price for phenol, for instance, one of the key raw materials for Songwon's additives, has more than doubled in the past year. That's his supply side; the demand side, he says, is open to price increases when justified. "Our strength is our antioxidants business but other products are dong well too," he says.
But Butti points to his company's backwards integration into many of the required precursor and raw materials as a huge asset. As a result, he insists, "What we're bringing to the market is an element of security, of supply reliability."
When founded in 1965 the company was active only in Korea and some of Asia. Its products were resold outside of South Korea and Japan exclusively through Clariant until September 2006, when Songwon started handling its own international sales and truly building a global business.
On the R&D front he says the supplier wants to further develop multi-additive "packs" optimized for specific applications. For instance, a blend of UV stabilizers could be used for thick-walled polypropylene (PP) parts, or new additive combinations can be offered that help increase the service life of PP in high-temperature applications while also limiting any migration of those additives out of the part.
Even greater than processor demand, lack of raw materials or other market-related influences, the legal outlook for plastic additives often is the key determinant of a product's chance of success. For Songwon, says Butti, REACh (Registration, Evaluation, Authorization and Restriction of Chemicals) and sustainability are viewed as opportunities, not threats. "You have to make the best of it," he reckons. As such, anything to do with regulatory affairs "goes straight to the top," meaning to C-level executives. Plus, he adds, "For every product we give customers a complete list of regulatory issues on that material throughout the world." The company recently established a new company, Chem Service Asia, to provide regulatory support to plastics processors and others using plastics and additives outside of Asia who want to do business there, and vice-versa. —Matt Defosse