Posted August 23, 2017

 

BANGKOK – Indorama Ventures Public Company Limited (IVL), a global chemical producer, announced that it has entered into an agreement to acquire DuraFiber Technologies México Operations, S. A. DE C. V. (DFT), a leading Mexican producer of durable technical textiles for industrial, tire reinforcement and specialty applications globally.

 

DFT’s Queretaro plant in Mexico (co-sited with IVL Mexico) has a capacity to produce a total of 37,500 tons/year of PET High Modulus Low Shrinkage (PET HMLS), PET Heavy Denier Industrial (PET HDI) and Nylon 6 fully-integrated into tire cord fabrics and industrial and industrial textiles. Its products are used in a wide range of applications, including reinforcement for conveyor belts, hoses, single-ply roofing, tents, automotive airbags, seat belts, safety harnesses and ropes.

 

The transaction is expected to be completed in the third quarter of 2017, subject to the usual regulatory approvals (including the approval by the Mexican Antitrust Commission).

 

Concurrently with this planned acquisition in Mexico, IVL has agreed to also acquire DuraFiber Longlaville, France, having a capacity of 35,000 tons/year, again subject to a definitive agreement, the relevant regulatory approvals and employee approval.
 

“The acquisition of DuraFiber is strongly aligned with our strategy of pursuing accretive growth opportunities in the high value-added automotive segment,” said Aloke Lohia, Group CEO of Indorama Ventures. “DuraFiber’s portfolio is a complementary fit with our current HVA tire cord fabric products in Europe and a strong fit with our existing PET site in Mexico. DuraFiber is a strong brand with recognized products with deep insights into the market combined with IVL’s global scale will enable us to better meet customers’ evolving needs.”

The market is projected to have a growth rate around 6 percent CAGR in 2017-2021. DuraFiber is the sole domestic tire cord fabric producer in Mexico with products approved by major global tire companies.
 
“The automotive segment is a key growth driver in IVL’s HVA portfolio that will bring exciting developments to the company,” Lohia said. “While PET is still an important backbone for the company, HVA is now accounting for 50 percent of IVL’s core EBITDA. Our focus remains on delivering best-in-class propositions, while driving our global innovation agenda to strengthen the company’s capabilities in the value chain where we are present. I am confident that with the transformational strategy to consolidate our leadership position in key businesses and markets, IVL delivers significant value to our shareholders.”

 

Fate of other DuraFiber operations cloudy

 

In July, DuraFiber Technologies announced that it has taken the next steps to prepare its production facilities to be idled if a buyer is not identified by September 11.

 

Affected facilities are located in Salisbury, N.C. and Shelby, N.C. – both Polyester Industrial Filament (PIF) plants – and Winnsboro, S.C., a tire cord conversion plant. DuraFiber employs approximately 800 people at its three U.S. plants and 1,800 employees globally.

 

In a News Update to members of the Synthetic Yarn and Fabrics Association (SYFA), Alasdair Carmichael of Carmichael International and director, Fibres Americas for PCI Wood Mackenzie, wrote, “It seems that the future of the remaining DuraFiber yarn plants (Salisbury, N.C., USA; Shelby, N.C., USA; and Bad Hersfeld, Germany) is unlikely to be with Indorama. We will have to see if any other buyer arrangement is forthcoming. We do not hear of much buying enthusiasm for the two U.S. plants, but a late move cannot be ruled out.

 

“Based on the advice that was sent to customers, DuraFiber will close these facilities on September 11, although we understand they have had a surge in orders for customer inventory build and may not be able to complete all by this date,” he continued. “Indorama clearly sees the automotive industry as a major part of its forward growth strategy and we do wonder if some further investment in tire conversion may be in the future.”

 

Carmichael added that he thinks it is likely that the previously announced investment in polyester high-tenacity capacity by the Indorama-owned PHP in Scottsboro Ala., will be expanded to meet the needs of the domestic technical fabric industry following the likely closure of DuraFiber Salisbury.

 

“There are major concerns in the industry over the survival of the Berry Amendment rulings for various fabric and finished products for the U.S. military without a US polyester high-tenacity supplier and we think that PHP will be aiming to fill that void.”

 

Sources: Indorama Ventures and Alasdair Carmichael