His company is using a three-pronged approach to take the business global, extend its product reach into high-value goods sector and address growing concerns about sustainability while fighting off polyol imports from other countries.
Taking the planned capacity expansion and growth into wider markets first, Won said: “Our propylene oxide capacity is not sufficient for downstream polyols to become a world scale company, so we are planning to expand our propylene oxide (PO) capability and we are targeting mechanical completion for the second quarter of 2017.”
This was reported in the December 2014/January2015 issue of Urethanes Technology International, and UTECH-polyurethane.com.
There are two reasons for the increase in capacity, he said
Firstly, the “PU market is increasing at a compound annual growth rate of about 4%. It is a good sustainable material.”
Secondly, there is great and increasing competition in commodity polyols, he said. “Chinese producers are growing with price competitiveness based on low raw material and labour cost,” said Won. "The competition is getting higher and higher for commodity polyols. Growth in China’s polyol will pull down our profit considerably in near future.”
Greater economies of scale will help SKC compete, the company believes.
“We are shifting our paradigms from the commodity to the specialty sector. To supply our customers’ needs specifically in areas of eco-friendliness, energy savings, safety, and flame retardancy,” Won said, explaining that this can help strengthen the business.
This expansion is being bolstered by research into speciality grades, he said.
China’s market is changing.
“China’s great strength and volume in commodity polyols makes it very hard to for companies to compete in that sector in this part of the world,” said Won.
The Chinese market is also changing. In the past, it was a very basic commodity chemical market. Now there are many commodity polyol suppliers and they try to export excess capacity at low prices, said Won.
Won added that there is some development of specialty polyols in China, but their production is still focused on the base polyols (Mw3,000~5,000) and technical development which is needed to compete in high value market is being carried out at few companies.
“So we has been shifting focus to the specialty markets, like elastomers and high-performance insulation for the shipbuilding industry, and photovoltaics. We have already commercialised some new products and we are reinforcing research and facilities for the elastomers market."
Innovative approach to market
In 2013, SKC refined its approach to market and has been has targeting a number of global high-value goods producers. “To secure the future of our products, we are now concentrating on contacting high-value goods manufacturers around the world such as Ekornes of Norway and StressLess, Tempur, Henkel, Bosch and Mercedes and Audi. So we are extending our business into specialized high value goods. 2014 has been a year of explaining who SKC is too many companies in that sector”, he said.
“Recently we had response from those companies after our effort in R&D and aggressive marketing. We are very quickly getting a reputation by supplying our products to the high-end market,” said Won.
He added: “We have good relationships with car companies such as Hyundai and KIA as well as refrigerator companies like Samsung and LG and they are building many overseas sites, said Won.
“As a package, we can supply them with technical assistance and good products to support them,” he said. “We think we will have good results soon,” said Won.
"Our research and development and marketing departments’, efforts are truly tremendous and we will pursue major PU system producers in the world to compete with Bayer, BASF, Huntsman, Dow and other global majors," said Won.
SKC is looking to the high value segment in China because this is growing strongly at the moment. Much of the thrust with global automotive brands is to supply MDI-based systems for interior and NVH components,” Won said.
SKC has a systems house in China which focuses on supplying Korean automotive component makers related to Hyundai and KIA.
While this is probably sustainable, the real growth in china is in the high-end market for consumer products. SKC clearly fears that just as low-end Chinese car brands are suffering at the moment, this could move up the automotive value chain to low-to-mid-range brands. Also SKC wants to be close to new China-based luxury brands.
Outside of China, SKC is looking at India. This would be a representative office to promote polyols.
In India, the new government is changing things domestically. The industry is developing faster than expected so say the Indian market is quite big and there could be good chances to start our business. “Actually we had office there but it was so tough to operate we had to retreat. We are now reconsidering,” said Won.
SKC has three systems houses in Poland, China, the US and is considering three more, said Won. These would be in Monterrey in Mexico, Dubai and south-east Asia, he said.
“We’ve checked out the possibility of Russia, but it’s too early,” he said. “That industry is not yet matured so we are waiting. But we are looking at other countries in Central Asia, Turkey, and possibly India,” he said. The systems house in the Monterrey area of Mexico would support Kia, which has announced it will build a 300,000 car per year plant in Mexico in 2016.
Moving up the value chain.
Most of the issues facing the Korean polyurethane industry are around ecology and safety, this is because our standard of living is getting higher and people require more eco-friendly and safer products.
To help meet these demands, SKC is “trying to develop a 50% bio-based polyol using castor oil,” Won said. “We are using our best efforts to acquire the technology.”
In other formulation developments, Won said SKC is cooperating with Solvay in terms of blowing agents. “They have eco-friendly blowing agents and we have polyol systems and together we will make a business arrangement to cooperate,” he said.
Chulho Lee, R&D project leader, “the Korean market, is currently supplied by Korean