We'll Emerge as a Global Sr Brand

The formation of ARLANXEO, a joint venture of two industry giants LANXESS and Saudi Aramco -- is a landmark development in the global synthetic rubber business. In an interview to Rubber Asia, Jan Paul de Vries, Chief Executive Officer of ARLANXEO, explains the factors that led to the formation of the new JV, how it will leverage the combined strengths of the two partners to enhance their competitive edge in the global market and how it will benefit the customers. He points out that the current market environment with over-capacities and price pressure is a major challenge for the SR industry and asserts that ARLANXEO is well-prepared to face this challenge and position itself as a fully integrated major player in the synthetic rubber industry.

How do LANXESS and Saudi Aramco gain from the formation of ARLANXEO?

ARLANXEO combines the strengths of its two partners, LANXESS and Saudi Aramco, bringing together the synthetic rubber businesses of LANXESS with leading market positions and the world’s largest integrated energy enterprise, Saudi Aramco. Therefore, ARLANXEO will be able to produce synthetic rubber in a fully integrated value chain in the mid-term -- from the oil field to the end-product.

Before the establishment of ARLANXEO, LANXESS was the only company among the leading international rubber producers that was not backwards-integrated – as one of the key market players in synthetic rubber there was still a clear gap in our value chain.

Under the umbrella of ARLANXEO our rubber business will strengthen its competitive position in the future due to having direct access to key raw materials. On top of this, this alliance of two strong partners gives us a competitive edge in the ongoing challenging market environment of the global rubber business.

Is the growing trend of consolidation in the SR industry one of the main reasons for forming ARLANXEO? Going forward, do you see more consolidations in the industry?

With the establishment of ARLANXEO, we have resolved the backward integration issue. ARLANXEO will be a company with a fully integrated value chain. As stated before, ARLANXEO is a partnership formed by two companies who saw the benefit of leveraging each other’s strengths to gain mutually from having a stronger footing in the market.

In the chemical industry, we do indeed see a process of consolidation at the moment. Companies are re-orienting themselves due to the changing environment in the global chemical industry. Driving factors here include the new role of the Chinese companies looking for further growth and know-how opportunities, both within and outside China.