Celanese Corporation has signed a definitive agreement to acquire the Forli, Italy-based SO.F.TER. Group, one of the world’s largest independent thermoplastic compounders. Celanese will acquire SO.F.TER. Group’s comprehensive product portfolio of engineering thermoplastics (ETPs), thermoplastic elastomers (TPEs), as well as all customer agreements and all manufacturing, technology and commercial facilities.

SO.F.TER. Group began operations in 1980 in Italy by manufacturing polymeric compounds for the shoe-making industry. Today, SO.F.TER. Group has approximately 550 employees in Italy, Mexico, Brazil and the United States and has 55 production lines across four manufacturing facilities in Europe and four manufacturing facilities in the Americas. The SO.F.TER. Group’s product portfolio of engineered thermoplastics and thermoplastic elastomers includes more than 6,000 grades.

Supply length is expected to remain in place in the US PP market until demand begins to recover from the coronavirus crisis.

“This is the next step in the evolution of Celanese to extend our global leadership position in the engineered materials market,” said Scott Sutton, Celanese executive vice president and president of Materials Solutions. “SO.F.TER. Group is a leader in the design, development and production of ETPs and TPEs with a fast and flexible customer-oriented business model that will integrate well within the Materials Solutions core of Celanese. This acquisition continues Celanese’s focus on bringing technical expertise, production and compounding capabilities closer to our valued customers by extending our footprint with industry leading products and capabilities in Italy, Mexico, Brazil and the United States.”

The long-term growth prospects for PP remain positive as the polymer is very versatile and able to substitute for other plastics in a number of applications.

Export activity is expected to remain elevated into the second half of 2020 as domestic consumption is expected to remain low throughout the rest of the year while additional capacity is expected to come online.

PP supply lengthened during 2019 as several producers completed debottlenecking projects. Further capacity growth is anticipated in 2020 as Braskem is planning to start up a new 450,000 tonne/year PP plant in La Porte, Texas in the summer.

Data from the American Chemistry Council (ACC) and Vault Consulting showed US PP inventories declining in January and February before picking back up in March and April. PP inventories reached multi-year highs in the summer of 2019 and remain below those figures through April.

Rising production within the US and Canada over the coming years may lead to greater export activity out of the US in the coming years.

Some PP applications such as food packaging saw steady demand in the initial weeks after the lockdown measures were put in place. Demand for non-woven and fibre grades increased as demand for surgical masks and gowns rose significantly.

Celanese’s acquisition of SO.F.TER. will augment the company’s presence in engineering plastics and extend its presence into the elastomers field.

PP has been successfully competing against polystyrene (PS) in a number of applications over the past several months. PP has been competitively priced relative to polystyrene (PS) rand PS has also experienced some negative publicity recently over concerns that the polymer is not very recyclable. ■

Adders declined over the course of 2019 as supply expanded while overall consumption levels fell.

“Joining Celanese is a natural continuation of the SO.F.TER. Group success story of growth, customer innovation and application expertise,” said Italo Carfagnini, chairman of the board of directors, SO.F.TER. Group. “From our beginnings in Italy in 1980 to being a key part of the Celanese engineered materials business, we will continue to drive innovative and highly specialized solutions for customers. We look forward to the future with Celanese, not only for our customers but also for our dedicated and talented employees.”

US PP demand showed a promising start to 2020 after a experiencing a down year in 2019. Initial hopes for higher consumption levels were undone by the end of the first quarter as the coronavirus spread to the US, inspiring widespread lockdown measures beginning from mid-March.

Current bulk technologies such as the Spheripol process developed in 1982 by Himont (later Basell, now LyondellBasell) replaced the solvent in an older process with liquid propylene.

Catalyst activity from the older process was also improved, allowing for the introduction of gas phase technology.

According to data from the ICIS Supply and Demand Database, US PP consumption declined 1.7% in 2019 compared with 2018. Consumption is expected to decline by another 1% in 2020 before rebounding in 2021.

The largest outlet is injection moulding applications, which include packaging, parts for electronic and electrical appliances, caps and closures, toys, luggage and a variety of household goods. The second largest outlet is in fibres, where carpet face yarn for carpet backing has been a growth market for PP.

According to the ICIS Supply and Demand Database, average utilisation rates are expected to decline over the next two years to around 81% by 2021 before rising in 2022.

Export activity picked up from April as slower domestic demand caused suppliers to direct more material into the export channel.

Engineering Thermoplastics (ETPs): Litepol polypropylene (PP) filled with hollow glass microspheres, Tecnoprene glass-filled PP, Polifor PP, Talcoprene talc-filled PP, Carboprene calcium carbonate-filled PP, Litepol B polyamide (PA) and filled with hollow glass microspheres, Nylfor B PA 6, Nivionplast B PA 6, Nylfor A PA 66, Nylfor R, Nivionplast A PA 66, Pibifor PBT, Pibiter PBT, Abistir ABS, Retelan ABS, Blendfor PC/ABS, Reblend (PC/ABS), Stirofor (HIPS), Sanforc SAN, Cabofor PC and Norfor PPE.

Polypropylene (PP) is used in a wide range of consumer and industrial products. Three forms of PP can be produced: isotactic, syndiotactic and atactic. Isotatic PP is the main form manufactured.

Celanese expects to integrate SO.F.TER. Group’s full product portfolio and production capabilities into the Celanese engineered materials business including the following brands:

Thermoplastic Elastomers (TPEs): Pibiflex (a PBT-polyether copolymer), Forprene thermoplastic vulcanizate (TPV), Laprene styrene-ethylene-butylene-styrene (SEBS), Sofprene T (styrene-butadiene-styrene), Forflex TPO, Sofprene footwear compounds based on SBS, Sofpur thermoplastic polyurethane (TPU), Sofprene P (TPO), Gumfit copolyester;

PP prices declined to the lowest levels seen in a decade in the early months of 2020 as the coronavirus crisis caused a significant drop-off in demand while also pulling upstream costs lower.

Based on data from the ICIS Supply and Demand Database, US PP consumption is expected to rise above 2018 levels by 2021 after declining in both 2019 and 2020.

Work is underway to develop the use of metallocene catalysts in PP production to improve resin properties. Borealis’ Borstar bimodal polyethylene (PE) process developed in the mid-1990s has also been adapted for the production of PP.

PP demand is likely to experience the sharpest decline during the second quarter before economic activity begins returning to more normal levels in third and fourth quarters as the lockdowns in different US states are graudally lifted in phases.

US PP contracts are typically formula-based and are set at polymer grade propylene (PGP) values plus an adder.

Celanese expects to complete the acquisition in the fourth quarter of 2016, pending customary closing conditions and regulatory approvals. Until closing, Celanese and SO.F.TER. Group will continue to operate as independent businesses.

The acquisition will nearly double the number of Celanese engineered materials product platforms. Additionally, SO.F.TER. Group’s manufacturing facilities and product portfolio will provide a vehicle for additional growth, investment and synergies.