The ongoing consolidation in the engineering compounds market took an interesting twist with the announcement that DSM and Mitsubishi Chemical Co. (MCC) will swap whole portfolios.
DSM is trading its Xanter polycarbonate business to Mitsubishi Chemicals for its Novamid nylon (polyamide) product line. Each business represents about $128 million in annual net sales. From an engineering perspective, the move is significant because it positions DSM as a growing force in the nylon business.
DSM is one of the two biggest producers of nylons globally with a market share of more than 30 percent. DSM describes itself as the leader in high-heat-resistance plastic compounds. DuPont, which invented nylon, is the largest global producer of the engineering material.
Importantly, the acquisition moves DSM into the nylon 66 business. The addition of the Mitsubishi portfolio will also make DSM a bigger player in the Asian market, where growth is highest. MCC will compound polyamide in Kurosaki (Japan) for DSM as part of the agreement.
The swap will also enable DSM Engineering Plastics to strengthen the service and innovation capabilities it offers to the automotive industry, the electrical market and the flexible packaging market in Europe and the United States. DSM participates in the U.S. market through a compounding plant in Evansville, IN which it acquired from Akzo in 1992. DSM also makes engineering polyester compounds.
MCC will be able to fortify its global position in polycarbonate as a result of the transaction.
Roelof Westerbeek, president of DSM Engineering Plastics, says "Through this swap we will strengthen our position in PA6 and at the same time expand our portfolio to include PA6/66."
In light of the current difficult economic conditions, MCC is actively restructuring its petrochemicals business, concentrating on its core activities, such as the polycarbonate operations.
Last year DSM opened the first Akulon PA6 polymerization plant in China and earlier this year a greenfield facility for producing engineering plastics compounds in India opened. In Japan, DSM Japan Engineering Plastics entered the market with the world's number one high-heat polyamide (Stanyl) two decades ago.
The deal is expected to close by the end of the year.