DSM Targets Bigger Role in Nylon Development

The ongoing consolidation inthe engineering compounds market took an interesting twist with theannouncement that DSMand Mitsubishi Chemical Co. (MCC) willswap whole portfolios.

DSM is trading its Xanterpolycarbonate business to Mitsubishi Chemicals for its Novamid nylon(polyamide) product line. Each business represents about $128 million in annualnet sales. From an engineering perspective, the move is significant because itpositions DSM as a growing force in the nylon business.

DSM is one of the two biggestproducers of nylons globally with a market share of more than 30 percent. DSMdescribes itself as the leader in high-heat-resistance plastic compounds. DuPont,which invented nylon, is the largest global producer of the engineeringmaterial.

Importantly, the acquisitionmoves DSM into the nylon 66 business. The addition of the Mitsubishi portfolio willalso make DSM a bigger player in the Asian market, where growth is highest. MCCwill compound polyamide in Kurosaki (Japan) for DSM as part of theagreement.

The swap will also enable DSMEngineering Plastics to strengthen the service and innovation capabilities itoffers to the automotive industry, the electrical market and the flexiblepackaging market in Europe and the United States. DSM participates inthe U.S. market through acompounding plant in Evansville, IN which it acquired from Akzo in1992. DSM also makes engineering polyester compounds.

MCC will be able to fortifyits global position in polycarbonate as a result of the transaction.

Roelof Westerbeek, presidentof DSM Engineering Plastics, says "Through this swap we will strengthen ourposition in PA6 and at the same time expand our portfolio to include PA6/66."

In light of the currentdifficult economic conditions, MCC is actively restructuring its petrochemicalsbusiness, concentrating on its core activities, such as the polycarbonateoperations.

Last year DSM opened thefirst Akulon PA6 polymerization plant in Chinaand earlier this year a greenfield facility forproducing engineering plastics compounds in India opened. In Japan, DSMJapan Engineering Plastics entered the market with the world's number onehigh-heat polyamide (Stanyl) two decades ago.

The deal is expected to closeby the end of the year.