Joint Venture between SKC and Mitsui Chemicals Set to Advance into Russia

Mitsui Chemicals & SKC Polyurethanes Inc. (MCNS), a joint venture between SKC of South Korea and Mitsui Chemicals of Japan, will establish a system house in St. Petersburg, Russia to make a full-fledged entry into the Russian market. A system house means a base for making customized system polyols by mixing various kinds of polyols, which are the raw material for polyurethane.

SKC said on June 10 that MCNS concluded an agreement to invest in St. Petersburg Special Economic Zone (SEZ) at the St. Petersburg International Economic Forum (SPIEF) in St. Petersburg, Russia on June 8. This will make MCNS eligible for administrative support in acquiring a plant construction permit and tax benefits. MCNS plans to start building a 15,000-ton system house in a site within the SEZ in September for completion in the first half of 2020. To this end, SKC set up a corporation in April and is now preparing for the start of the project including plant design.

Russia has the 11th largest economy in the world in terms of GDP and a solid market with a population of 140,000 people. Production of automobiles and refrigerators requires polyurethane. Russia needs three million automobiles and four million refrigerators, respectively, per year. The Russian polyurethane market has grown 5 percent annually and is expected to grow faster in the long term.

In particular, major polyurethane customers in Korea and Japan such as Hyundai Motor, Toyota and Nissan, already advanced into the city of St. Petersburg where MCNS will be located. Hyundai Motor is enjoying the second largest market share in the automobile market of the Russian city and LG Electronics ranks second in the refrigerator market of the area.

MCNS plans to supply high-quality products to these companies first while expanding supply to Russian companies in the future.

In the meantime, MCNS is a polyurethane manufacturing company that SKC and Mitsui Chemicals of Japan jointly set up with 50-50 investment in July 2015. Based on its capacity to produce 280,000 tons of polyols, 350,000 tons of methylene diphenyl isocyanate (MDI) and 120,000 tons of toluene diisocyanate (TDI), the company is supplying raw materials for polyurethane to 11 system houses in the United States, Mexico, China, Poland and India.