Lanxess chemicals group has begun construction of a new manufacturing plant for lubricant additives in Qingdao, China. The production facility, which will be operated by the companys Rhein Chemie subsidiary, is scheduled to go onstream by the fourth quarter of 2008 and will initially employ 50 people.
Leverkusen, Germany-based Lanxess valued its investment in the single-digit million Euro range. At the new facility Rhein Chemie will manufacture light-colored sulfurized additives for lubricants, sold under the Additin brand. The company said its formulations improve performance and service life in industrial applications, while also aiding environmental protection, as they can replace products now used in China that impact the environment.
The new facility is a further step in our drive to increase profitable growth in Asia, said Lanxess Management Board Chairman Axel Heitmann. We are rigorously expanding our presence here.
In Quingdao, Rhein Chemie has produced rubber chemicals since 1999 within a joint venture. The company doubled capacity of polymer-bound chemicals last year with the commissioning of a second production unit. Lanxess has more than 800 employees in China, including 160 working for Rhein Chemie in Qingdao. The chemicals company commissioned three new facilities in China – in Qingdao, Wuxi and Weifang – in 2006.
Rhein Chemie had worldwide sales of 313 million in 2004, the last year for which figures are available from its pre-Lanxess days as part of the Bayer group. Its sulfurized EP agents have been strong sellers in Europe, and, the company says, have seen good growth in North America and Asia as well. The company has plants in Europe, the United States and Asia, and two of the plants – in Mannheim and Antwerp, Belgium – make most of its lube additives. Additin products are also made at toll manufacturers in North America and China.
According to Lanxess, the market for lubricants in China – an annual volume of about 4.4 million metric tons – is about four times as large as in Germany. Estimates in consultant Kline and Co.s Business Opportunities in the Chinese Lubricants Market confirmed that.
Geeta Agashe, director of Klines Petroleum and Energy Practice, told Lube Report, we predict an overall annual growth rate at 7 percent, with the consumer automotive segment forecast to grow at 10 percent over the next five years, the industrial segment at 7 percent and the commercial auto segment at 6.7 percent. Klines study estimates the China lubes market will equal about 6.3 million metric tons in five years.