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Lotte Chemical plans to acquire JSR elastomers business

January 25/2021

MOSCOW (MRC) -- Lotte Chemical has recently completed its due diligence on potential acquisition of JSRs elastomers business, according to Chemweek with reference to a local press report from Business Korea.

Lotte Chemical has selected Nomura Securities as its lead manager for the acquisition, says the report.

JSRs elastomers unit produces emulsion styrene-butadiene rubber (E-SBR), solution styrene-butadiene rubber (S-SBR), polybutadiene rubber, and isoprene rubber. IHS Markit data says that JSR is the largest producer of SBR in Japan, accounting for a combined capacity of 210,000 metric tons.

Lotte Chemical established a joint venture (JV) with Versalis (Milan), the chemicals arm of Eni (Rome), and has been operating 100,000-metric tons/year S-SBR facilities for high-performance tires since 2017.

The press report says that the JV has been making losses in this business. It is not easy for new companies to enter the S-SBR sector due to difficult quality certification procedures set by existing customers such as automakers, adds the report. The report says that the acquisition will help Lotte Chemical to meet product standards required by global tire manufacturers.

Lottes flagship products include butadiene and styrene monomer, used as raw materials for synthetic rubber. Lotte will be able to enjoy huge synergies by absorbing the elastomers division from JSR, says the report.

It says that JSR plans to sell its elastomers business for a price of up to 1 trillion South Korean won (USD908 million). Press reports quoting industry experts say that JSRs elastomers business suffered a loss in the aftermath of COVID-19 in 2020, a factor that will be reflected in price calculation.

As MRC reported before, South Koreas Lotte Chemical has restarted its fire-hit naphtha-fed steam cracker in Daesan. Thus, the facility begins trial runs of naphtha on 7 December, 2020, and the company achieved commercial production on 8 December. The cracker was shut on March 4, 2020m following an explosion, which injured more than 30 people.

Lotte Chemical runs two naphtha crackers in South Korea. One cracker is located in Daesan county in Seosan which can produce 1.1 million tonnes per year of ethylene with the other 1.2 million tonnes per year cracker in the southwestern city of Yeosu.

Styrene is the main feedstock for the production of polystyrene (PS).

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics totalled 454,990 tonnes in the first eleven months of 2020, which corresponds to the last year's figure. November estimated consumption of PS and styrene plastics grew by 4% year on year to 45,830 tonnes.
Author:Margaret Volkova
Tags:Europe, PS, butadien, styrene, elastomer, natural rubber, Eni, Honam Petrochemical, Lotte Chemical, Versalis, Italy, Russia, South Korea, Japan.
Category:General News
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