TOKYO (Dec. 2, 2016) — Japan's Zeon Corp. and Sumitomo Chemical Co. Ltd are proceeding with plans to merge their solution styrene-butadiene rubber (SSBR) businesses into a joint venture.
The JV, called ZS Elastomers Co. Ltd (ZSE), is to be based in Chiyoda-ku, Tokyo, and will be 60-percent owned by Zeon and 40-percent owned by Sumitomo Chemical. It has a start-up capital of $4 million.
The new company's scope of business will range from R&D, manufacturing and processing of SSBR to buying and selling the material, which is used mainly in the production of low rolling-resistance tires.
At this point, the companies' separate production assets will not be part of the venture, according to Sumitomo Chemical, although there are plans to combine these functions in the future.
Until such time as that is realized, Sumitomo said ZSE will purchase products produced by Sumitomo Chemical and Zeon to use for sales.
The companies did not disclose the new venture's financial expectations; Sumitomo said its S-SBR business generated $240 million in sales for the year ended March 31.
Zeon operates SSBR plants in Tokuyama, Japan, and Singapore with combined annual capacities of 110,000 metric tons, while Sumitomo Chemical plants in Chiba, Japan, and Singapore total 48,000 metric tons.
The companies launched a feasibility study for the SSBR venture in August.
The study, Zeon said, found that the merger would generate synergies, in terms of meeting increased demand for the material in fuel-efficient tires and addressing growing competition in the market. The companies did not quantify the scale of the expected synergies.
The companies said they expect the partnership also will accelerate new product development to meet customer needs, improve cost competitiveness and secure stable product supply.
According to Zeon the ZSE venture is scheduled to be established on Dec. 8 with the full formal launch of the JV scheduled for April 1.
Shahrzad Pourriahi is a reporter with European Rubber Journal, a London-based sister publication of Tire Business.