February 1, 2013: Dr Ron Commander & Dr Joachim Grub, Lanxess Ag

What are your individual responsibilities?
Dr Grub: I am responsible for the performance butadiene rubbers business unit, which includes poly and styrene butadiene rubber and we manufacture at six different locations worldwide. These locations include one plant each in North and South America and two in Europe. Our link to India and Asia is the new Nd-PBR plant coming up at Singapore with a capacity of 140,000 tonnes, the biggest of its kind. It will serve the Asian and, in particular, the Indian markets. Our Indian customers will be established Indian tyremakers. Dr Commander: I head the Butyl rubber business unit, headquartered in Singapore and I live there and run it. As of now, we have two units that are operational. A third is coming up in Singapore. We are one of three companies globally that make halo-butyl in commercial quantities. This material goes into the inner lining of the tyre, the innermost layer, and it is either bromo or chloro-butyl that is used. Our technology is very advanced, the plant represents advanced technology and the reaction takes place at minus 100deg C. All our plants are flexible — they can make both kinds of butyl, regular and halo, and the former is used in India and parts of Germany. Over 50 percent of butyl business sales are in Asia-Pacific.

You will also be looking at the ASEAN market, no doubt, and the benefits of the FTA?
Dr Commander: Yes, we are looking at that and we set up in Singapore because we have a contract with Shell which commissioned a new cracker (in Singapore) and have secured a long-term contract for our major raw material. This plant is not an exact copy of the two we have now. It is an improvement from an energy usage and environmental footprint.

What about the Chinese market?
Dr Commander: We will also supply China because that is our big market. The market is larger there than India’s but India, as I said a couple of years ago, is the next China. The growth could be as good if not better than China’s but from a butyl perspective, it starts from a much smaller baseline. But demand in India will go up and from a butyl point, it has a huge potential.Dr Grub: The plant serves India and Asia-Pacific and for the time being, it may not be the biggest in sales but it is the biggest in growth potential and future market size. The synthetic rubber market is one global market; we have to look at logistics and lead time aspects when we cater to our clients.

This is part of Lanxess’ shift to Asia, isn’t it?
Dr Grub: We have capacities in western Europe and North America but are moving to Asia. As PBR, we have made a significant foray south of the equator into Brazil as well. When we build new capacities, it is most likely that we will build them in the emerging markets; that is the direction of the future.Dr Commander: It makes good business sense.

We hear that usage of radials in commercial vehicles is limited. So is this an opportunity?
Dr Commander: It is an opportunity for halo-butyl. We like tyres for the truck segment because they take a huge weight because they are bigger and take more halo-butyl than a passenger car tyre. We see that as part of the growth in India. It could be trucks, mining machinery and as these go radial, it will boost the growth of halo-butyl.

What about under-the-hood applications?
Dr Commander: Rubber parts that are being used under the hood, as engine temperatures go up, O-rings, hoses and gaskets need to be made of material that can withstand that higher temperature. Synthetic rubber has evolved with the engine requirements that operate in stringent environment. Lanxess is the brand for polymers that can be used for under-the-hood applications.Dr Grub: In the future, there will be applications for electric and hybrid cars, as torque functions as a function of the rpm of the motor will be different from a conventional engine and lead to different properties of the tyre as it would have to transfer torque of the electric engine on the road. So there will be an additional direction of development. Today, it has been optimised for the internal combustion engine (ICE) but we have to start now to be ready for 2020.

What about tyre labeling that kicked off in November 2012 in Europe?
Dr Grub: The legislator in EU is setting minimum requirements for rolling and wet grip and you cannot offer tyres that do not meet these requirements. These minimum requirements will be increased in 2016 and it sharpens the senses of the consumer about tyre performance; the end-user gets way up more transparency and awareness and it will potentially change his behaviour. We have had refrigerator labeling in Europe for more than a decade and so manufacturers of this product have to meet certain norms.Finally, the consumer gets the best lifecycle economic and ecological product and it will not get more expensive only that inferior products will disappear. As a consumer gets aware, he takes more care and it is in your focus . . . you will look at inflation pressure and also lead to safer driving behaviour.

So India needs this legislated? What is your point of view?
Dr Commander: Tyre consumers, wherever they are, are not fully aware about their tyres and this is true for emerging and developed markets too. Most people who buy a car don’t ask about the tyres and when they go to change a tyre, they will do what the dealer says. Tyre labeling has been a huge step in educating the consumer and it is the tyre that keeps you on the road and many don’t make that connect. So if labeling or advertising helps the consumer, it is a positive development and it is for all markets, not just India.Dr Grub: In Europe, we are just at the beginning and it’s just three months since tyre labeling came into force. It has started with two parameters — wet braking and rolling resistance — and there is a third — noise generation — but in the future more parameters may well be added such as mileage. It is good that we have started in Europe and this information gets passed on through the label. The label will see additions and that is a good thing.

What about R&D from India?
Dr Commander and Dr Grub: At the moment, no. We are not looking at R&D from a butyl perspective. In PBR, we have simple principles, we do the R&D in Germany. We do some research in Brazil as well as it is our biggest ESBR market and we want to do some improvements, and in re-treading market which is a significant market. We have a technical marketing organisation that looks at customer needs and have this set-up in every region where we operate. They work closely with the customer and receive feedback that is valuable for us.