Bouncing back
January 18, 2010
Burgeoning demand for cars in Asia proved to be a decisive factor for Lanxess, Germany's largest listed specialty chemicals group.
Last year, the company announced it would postpone plans for a new rubber factory in Singapore to 2014 because of the global economic crisis.
Now, the Leverkusen-based company has done an about-face, with construction on the 400 million euro ($575 million) plant to begin in May 2010. Production at the plant on Jurong Island is slated to start in the first quarter of 2013.
"The market has driven us to make this decision," Ron Commander, the head of Lanxess' butyl rubber unit, told reporters. "As of the third quarter of 2009, we saw much more stability in the market, and a lot of growth in Asia, predominantly in China."
The company's two existing butyl rubber production facilities in Zwijndrecht, Belgium, and Sarnia, Canada, are already running at high capacity; Lanxess predicts that global tire sales will return to pre-crisis levels in 2011. Butyl rubber is also commonly used in the pharmaceutical industry.
Unit headquarters to relocate
The company also announced that it will move the butyl rubber unit's headquarters from Fribourg, Switzerland, to Singapore in order to better serve the rising demand in Asian markets.
"We will be focusing our attention this year especially on Asia, which has already emerged strongly from the economic crisis," said Lanxess Chairman Axel Heitmann.
The company's customers include tire makers Bridgestone, Michelin, Hankook and Yokohama.
Shares in Lanxess got a boost from the news on Monday, rising as much as 1.07 euros, or 3.6 percent, to 30.45 euros by midday in Frankfurt. Several analysts also raised their ratings on the stock from "neutral" to "buy."
"This is a sign of trust, and it clearly reflects that the current market for rubber appears to be very healthy," Andreas Heine, analyst at Unicredit, told the Financial Times Deutschland.
dc/dpa/afp
Editor: Susan Houlton