Investments in Synthetic Rubbers, Elastomers Slow Significantly

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Researched by Industrial Info Resources (Sugar Land, Texas)--Almost a year ago, Industrial Info reported that capital spending for the production of synthetic rubbers and elastomers would remain strong for 2007. The industry appeared to hold its strength with an estimated $279 million in capital and maintenance beginning some phase of construction or advanced engineering this year. The horizon doesn't look nearly as promising for 2008 and beyond. At the moment, barely $100 million in planned investments has been identified for next year in the domestic market.

Plant owners in this segment of the Chemical Processing Industry (CPI) will begin to struggle to develop new capacity in domestic markets as the cost of raw materials and feedstock continue their climb to levels that make new investments unattractive or too costly. Most of the investment plans for 2008 in this industry segment will be limited to end-of-life equipment replacements and infrastructure improvements aimed at increasing efficiencies or reducing costs.

Potentially, the single largest investment of the segment in 2008 could be an expansion by Solvay Advanced Polymers LLC (Alpharetta, Georgia) at its Augusta, Georgia site. If approved, the estimated $30 million expansion would be the second phase of a previous expansion of the site's Amodel unit. Lockwood Greene (Augusta, Georgia), the alliance engineer for this plant location, has performed some of the studies for this project initiated in fall 2005.

ExxonMobil Chemicals' elastomer business, formerly a subsidiary named Advanced Elastomer Systems Limited (Akron, Ohio) has permanently closed its Wadsworth, Ohio, plant effective this month and plans to evaluate the dismantlement or selective equipment relocations that could take place in the coming months. As somewhat of a counter note to this closure, ExxonMobil plans to begin construction this quarter for the expansion of a similar plant in Cantonment, Florida. This project will include the addition of a new production line to produce its Exxpro brand elastomer targeted at the automotive tire market.

The drastic difference in planned spending from this year to next can be attributed to several factors, including feedstock, the use of alternate materials in the automotive sector such as polypropylene and, of course, a growing base of production in overseas markets. This industry segment currently operates with only 60 plant locations in the United States and Canada employing less than 10,000 people. This industry segment isn't alone with its pressure to consolidate and the challenges to become more productive with less. The entire CPI faces similar pressures although because of the small size of this segment, many of the challenges appear to be even greater hurdles.

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