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SK Chemicals makes inroads into auto market

Feb. 13, 2014 - 19:54 By Park Hyung-ki
SK Chemicals, a listed Korean chemical materials company, is seeking to boost its super engineering plastic materials business for automobiles.

The company said on Thursday that it is in talks with Hyundai Motor and Kia Motors, as well as some European automakers to supply polyphenylene sulfide.

When asked whether SK Chemicals is engaging German carmakers such as BMW, a company official said it is too early to disclose this since it is in the “pre-marketing stage.”

Hyundai and Kia are still testing its plastic material, he noted.

The engineering plastic, a lightweight alternative to metal, can be used for automobile engine covers as it can withstand extreme heat.

SK Chemicals is currently building a PPS plant in Ulsan City in southeast Korea, in a joint effort with Japanese chemical company Teijin. The plant is expected to be completed by the end of 2015, with a capacity to produce some 12,000 tons of PPS a year.

SK Chemicals will then become the first Korean company to mass-produce the plastic material.

This comes as the company seeks new growth as it faces stiff competition from China in its core polyethylene terephthalate business for beverage containers and bottles. Coca-Cola is one of SK Chemicals’ PET customers.

SK Chemicals liquidated its PET plants in Indonesia and Poland in 2010 as it sought to develop high-end materials amid increased competition from China’s low-price PET plastics.

PPS has been gaining recognition and popularity in the auto industry based on the introduction of lighter-weight vehicles.

The global PPS market is expected to increase 10 percent from 2013 to reach 170,000 tons by 2020, according to Grand View Research.

Besides marketability, there is another reason SK Chemicals is moving toward engineering plastics.

“Korean chemical companies are trying to shift their focus to high value-added products after seeing Chinese companies accelerating in recent years,” said Kim Byoung-chul, a professor of Hanyang University’s Department of Organic and Nano Engineering.

He added that Chinese chemical companies are increasingly moving to become self-sufficient.

Chinese firms are expected to reduce their reliance on imported chemical products to 188 million tons in 2017 from 306 million tons in 2013. Their self-sufficiency rate will climb to 87.5 percent from 73.7 percent during the same period, according to the Korea Petrochemical Industry Association.

Korean chemical companies, which have long benefited from the Chinese market, are hurrying to develop new materials.

The country’s leading chemical companies, including LG Chem, Hyosung and Cheil Industries, have been investing in engineering plastics for autos and electronic appliances.

By Shin Ji-hye (shinjh@heraldcorp.com)