Gujarat Fluorochemicals: A hidden fluorine story

[spatel]

Some data to chew about PVDF; size of opportunity (ballpark estimate), applications, growth, etc -

• The downstream applications of PVDF are in weather-resistant coatings (31%), injection molding (21%), lithium battery cathodes and separators (20%), and photovoltaic backplanes (8%).
• The total global production capacity of PVDF is about 114,000 tons, of which the combined production capacity of overseas (read ex-China) companies Arkema, Solvay and Kureha Chemical accounted for 53%.
• Dongyue Group of China currently has a production capacity of 10,000 tons of PVDF. Except for the 8,000-ton new capacity of Shandong Huaan New Materials (of China), a subsidiary of Lianchuang, which was put into production in the second half of this year, most of the remaining new capacity is still in the EIA stage and is expected to be released after the end of next year.

Source: https://min.news/en/economy/e2cdc7552f9010388a45bb1a4702f686.html

---

• Among the several major uses of PVDF resin, the proportion of the lithium battery market has increased significantly from less than 10% two years ago to 19.90%, and with the huge development of new energy vehicles, the proportion will increase.
• The ex-factory price of R142b (raw material for PVDF) has risen from 15,500 yuan/ton in Oct 2020 to the 38,000 yuan/ton in Apr 2021, an increase of 145%! This is because of increase in demand and implementation of quota production. 1 ton of PVDF needs about 1.62-1.67 tons of R142b.
• The demand for PVDF resin (in China) is as high as more than 50,000 tons! At present, the total production capacity of all domestic (China) PVDF resin manufacturers is not 50,000 tons! Due to the rapid development of global new energy vehicles, the use of lithium batteries for PVDF resin has increased sharply. Global lithium battery giants CATL, BYD, Panasonic, LG, etc. have seized PVDF resin production capacity globally, resulting in a tight supply of PVDF resin in all industries , And the expansion cycle of PVDF resin is about 3 years, seriously lagging behind the growth rate of demand for lithium batteries.

Source: With soaring raw materials, where does the fluorocarbon coatings market go?
(April 2021 article)

---

Snippet about PVDF from GFL latest investor presentation (here) -

• Few new PVDF grades (mainly for EV batteries) developed are in the process of customer qualifications
• There is substantial increase in demand for FKM, PVDF and Micro Powders. Additional capacities for these products are under installation and commissioning.
• Prices for FKM and PVDF have moved up due to rising demand and cost push of key raw material R-142B.
• GFL is backward integrating to produce R-142B for captive feedstock requirements for FKM and PVDF as well as for exports.
• GFL is in the process of setting up an integrated battery chemicals complex. In addition, GFL has developed suitable PVDF grades for cathode binder application.
• GFL is setting up India’s first PVDF solar film project which will be commissioned in the next financial year.

[Worldlywiseinvestors]

Gujarat: Several injured in blast at chemical factory in Panchmahal district

Gujarat Fluorochemicals – Explosion at Panshmahal refrigerant facility
As per media news, GFL had explosion at its Panshmahal refrigerant facility a while back. It’s the company’s single largest refrigerant plant.

[rdx111]

c0845888-7bcf-4f26-94bf-6a67d2f44ccd.pdf

The situation was brought under control within a short time by company’s emergency response system and support of local authorities.

While the impact of the incident is being ascertained, the damaged equipments are fuIIy covered byway of insurance.

[rdx111]

45c112c8-de1f-42f8-bfca-6d1c357dc18b.pdf

Company has incorporated
GFCL EV Products Limited as wholly owned Subsidiary Company:

[maven26]

[Raj_A_A]

Final tranche of shares sold by Inox Chem.
Sell overhang is over. Now the company should build on its strength and its expansion plans…

9c6bbded-d016-424e-983b-78ac7eb27a41.pdf (bseindia.com)

[zygo23554]

On simple unit economics there is something that needs to be checked

The business has been running at a Gross Asset Turns of 1x, for H1 FY22 the Gross Block was 3400 and the annualized revenue is around 3600 Cr. Assuming 30% EBITDA continues, the EBIT will be around 22-23%. Working capital cycle has historically been 160-170 days

At these numbers, how can the business hit 20%+ ROCE even if the growth rate is 20-25% over the next 3-4 years? Even if incremental asset turns are expected to be 1.5x, the overall business (including legacy business) will trend closer to 1.2-1.3x at most.

While the management has indicated an internal target of 100 days, how feasible is it to do this when you run an export oriented (50%) chemicals business where you are selling to large customers? On the face of it this looks too ambitious and unlikely to materialize unless something drastically changes. The bulk of the working capital is stuck in inventory which cannot be optimized beyond a point…

With a plan of 2500 Cr capex over the next 3 years, chances are 75-80% will be from internal accruals (assuming 700 Cr operating cash flows) with 500 Cr additional debt needed.

A lot of the thesis hinges on the assumptions of 1.5x incremental gross asset turns and working capital being optimized from the current level. If this does not happen, we might have a business that makes good products and grows at 25% p.a. but capital efficiency will always look average on paper at 15-16%. In a rising interest rate environment (2 years down the line), moderate ROCE might be viewed differently by the market than today. The valuation of chemicals companies till 2015-16 was muted because they were 15% ROCE when the benchmark G-Sec was yielding 8%+.

Can we be sure about these unit economics assumptions other than taking the management estimates at face value? Are the newer product lines (EV related) known to operate at higher asset turns and lower working capital cycle for sure?

[rupeshtatiya]

I think current capacity is not fully utilized and that is main reason for low fixed asset turns.

This is from one of the old calls - where management had said that 4200-4400cr is peak sales at the prices at that time on the gross block of 3500cr.

If memory serves me right, the prices of PTFE were around 600rs (~8$) when this comment was made and prices are close to 800rs (10-11$) as mentioned in Q2 FY22 conf call. And if one searches about pricing trends of new age FPs like PVDF, FKM etc. - all of these are on rising price trend due to exploding demand, China issues etc. So the peak revenue potential for the gross block of 3500cr at current prices is close to ~5000cr which is close to 1.4-1.5x.

Let me now point out few instances where capacity is not fully utilized for various segments -

AR21 - PTFE impacted due to COVID, expect to reach full CU in near term.

PTFE sales were 825cr in FY21. The company roughly has capacity of 1500 MT/month (900 MT/month value added and 600 MT/month regular grades). One can easily find the prices for regular/value added grades and can come to the peak revenue potential from PTFE. A simple 1500 MT/month * 12 * 10$ * 75 gives the revenue of 1350cr.

New FP capacity utilization was around 65% in Q2 FY22 - sales of 182cr in Q2 FY22. That gives peak revenue potential of 280cr per quarter, 1120cr annual run rate.

FSC also had below par H1 FY22 and it would continue to be below par for the rest of the FY22. But management has guided for 800cr sales in FY23 on the investment of 550-600cr investment with 22-25% margins.

Above is break up of new FP capacity from ICICI note. Broad average prices of molecules as I understand are below - PVDF (18-20$), PFA (25-30$), FEP (15-20$), FKM (15-20$), PPA (15$), micro powder PTFE (12-13$). It is quite evident that new age FP realization are 50% higher at the lower end of the spectrum vs PTFE. A simple 8400 * 15$ * 75 gives revenue of 945cr. At 20$ average realization, the number comes to around 1260cr. This is peak revenue potential at the capex of ~ 700cr, so definitely higher than > 1.5x.

Another thing to note is - PTFE expansion is in phase 2 at the capex of 300cr. PTFE has lowest realizations in all of the FPs. Majority of the rest of the capex is into non-PTFE and primarily PVDF which has much higher realizations. So with capex in new FPs and value added PTFE (and no capex in Caustic, regular grade PTFE), business quality, asset turns, margins are only bound to improve.

I would not hold my breath for improvement in inventory days or receivable days. Payable days will also not improve due to extreme backward integration. ROCE would be driven by improving realizations/improving margins/better product mix. ICICI Note has projected 38-40% margins for FY23/24. I think 35% margins and 1-1.2x asset turns (Fixed Assets + Working Capital) is what should be steady state.

I hope this helps.

[nikhil090]

With soaring raw materials, where does the fluorocarbon coatings market go? -...

Little dated article but gives some view on the PVDF and R142B correlation and the price changes that have been happening.

[ganeshrpl]

My notes from conference call notes: Q3 FY22. In case of any mistakes, they are purely mine…

1. Caustic Soda plant is running at full capacity

2. Chloromethane plan is also running at full capacity

3. MDC prices are trending down, and will like continue as more capacities for MDC are getting domestically.

4. FP:
   a. PTFE
   i. PTFE - robust demand across all geographies - saw vol e and price increases
   ii. PTFE plants are running at full capacity. Demand will continue to be robust for the coming few quarters.
   b. New Fps:
   i. Sequentially QoQ FY22 is down because of R142b Raw material constraint
   ii. Capacity utilization (CU) was @ 55% due to RM constraint.
   iii. Going forward with R142b plant coming up, this limitation will be surpassed.

5. FSC:
   i. Plant impacted due to fire. Vol e and Sales have been thus impacted in this quarter.
   ii. Plant is limping back to normalcy based on the various approvals which we are getting to restart the plant.

6. For the 9 months in FY 22,
   a. Net debt at 0.28
   b. Revenue has surpassed last full FY and for 9 months its at 2883 & EBITDA at 870 crores
   c. ROCE is now at 24% and
   d. ROE at ~20%

7. PTFE - we have substantially increased the prices by 20-25% starting Jan 1st.

8. Q - In spite of the Auto sector not performing as before, in spite of the substantial increase in prices, how has demand stayed inelastic?

• Given the prices have been suppressed, the sharp raw material price increases which had taken place in the previous quarter
• lot of demand for most of the products - across all geography whether it is Europe US, south Asia or India there has been a very robust demand and it’s coming from all application areas. NOT limited to only automobiles
• automobiles also have been UP despite the fact that there have been some headwinds because of the chip shortage but despite that robust increase in requirements from the auto sector also & we expect that as the chip shortage eases, the demand from the auto sector will further increase.
• Demand is coming in from the chemical industry, mechanical industry, electronics industry & semiconductor industries
• Competition from China? 80% of the production in China is for the domestic market it’s very limited export and there has been increase in the Chinese demand also - they have not been able to penetrate the high-end application area - so we see limited Competition from china in a substantial percentage of our markets abroad.

9. R142b: due to fire, we have been unable to start plant/delay/commissioning.142b plant was supposed to have been commissioned by middle of December -commissioned 10th of January - capacity eventually will be about 70 - 75 tons per day.

10. Will not be able to utilize the entire capacity now but over a period of time increase usage. Looking at prospects of exporting 142b - there is a huge shortage of 142b worldwide, prices have gone up - Exploring opportunities above our requirements of 142b! < additional revenue opportunities> for capital use.

11. Will we be hitting the full capacity utilization of 70-75 metric tons per day by next quarter?- We are backward integrated into the VDC facility by the end of the year we will have a substantial capacity of 142b to be available to meet all our requirements going forward of PVDF as we keep on expanding the PVDF business for the lithium-ion eb batteries

12. PVDF we have started submitting the samples of PVDF to the battery cells manufacturer:
    a. 1 US customer okayed the product.
    b. Year-end - delays, so will get further updates.
    c. grades which we have currently made - laboratories in Europe and u.s as well as some users in south Asia.
    d. middle of February - receiving feedback from at least one or two of the current customers.

13. 142b facility is now fully operational - the majority of the plants we would have commissioned by end of the first week of February.

14. new FP already at 100% CU - additional capacity of 300 to 400 tons of new FP which will also get commissioned by July of this year - hope that by 31st March’23 we will be operating this additional capacity also at full capacity.

15. Fluoro specialty (FSC) -

• For 2023 maybe some dip in the turnover - we had expected about 800 crores it might you know go down to about 700 crores.
• Depends on new capacity coming on board. 3 new plants are slated for commissioning by end of March this year. Depends on how quickly we ramp up sales and production from those new facilities - so 700 crores in 2023 given the current situation …
16. if any impact on the revenues during q3 and q4 will fire accident? - perhaps loss of profitability of about 25 odd crores in December - 15 odd crores during January – impact limited - loss of profit policy insurance – have filed claims.
17. On securing our lithium bicarbonate supply - in touch with government as well as through the government of India - tying up sources of lithium carbonate or lithium hydroxide from 2-3 geographies one is Australia and South American countries - progressing well - we will be able to tie up the lithium requirements for our upcoming projects it will take maybe a couple of months - our plant first plant is going to be commissioned by December 22 we have sufficient time to be able to tie up the contracting policy - it will be 1x1 with them and not via govt of india. ( in response to a question if we have to go through Govt )

18. government clearances expect to receive it fairly shortly - maybe in the next one to two months we should be able to get a clearance.

19. become a dividend-paying company > certainly from this financial year …

20. Q) On PTFE – you said in January almost 20 to 25 percent kind of price increase just wanted to know is it primarily driven by the cost-push which we are seeing in input cost is driving the prices across or is it just coming from the demand pool and solid demand-supply scenario globally?

• a bit of both - largely because the demand-pull which is coming from all sectors - across geographies -We are a critical part of the supply chain for a lot of customers and our grades have been fully qualified now with the various end customers whose demand is also growing.
• it is very difficult to get suppliers who will provide per specifications - takes a lot of time to develop products - testing and qualification cycle - we are in a very strong position to meet the current demand and so that has also allowed us to have an additional price increase

21. with a solid demand-supply scenario and rising price trend any plans to reevaluate PTFE 25% capacity expansion by end of next year? No, for now, will monitor how the entire situation materializes - we always have the possibility of further adding capacity because we have additional capacity in a monomer plant - so on a modular basis we can further increase capacities but that of course will totally be dependent upon how we see the markets growing.

22. There is an overall shortage of availability of the different FPs - in the December quarter we were impacted in the manufacture of PVDF and FKM because of non-availability of 142b - customers would not be able to get the material from elsewhere - so there is a lot of pent up demand - next couple of quarters are going to be very strong as far as demand is concerned. The customers are already lined up there -waiting for us to enhance our production, to meet the requirements – thus we are pushing for additional capacities to be and running quickly as possible so that we can cater to the requirement there in the market- so robust increase in demand and at this point of time since we are an integrated player we have a 142b available with us and - customers are looking at us preferentially. as we have control of the critical raw material 142b.

23. we had already contracted to import 142b from China for the months of october, November and then they refused to supply so you know for November – then fire at plant in December. So currently robust demand is there.

24. 142b captive consumption - we don’t foresee us being able to utilize the full capacities till the next 2-3 years till the PVDF of demand from EV battery application starts picking up substantially - at this point of time – we will utilize between our own captive requirements and exports we would probably be able to run the plant at about 50% capacity - that is only 35 tons per day 50 to 60% capacity

25. the new investments we are expecting - should come up to the company average - both in new FP and PTFE where the margins are very strong at this point of time, so FSC maybe the margin will still remain lower than the FP segments

26. PVDF resin to film this will be up by September of this year - start offering films to solar panel manufacturers both in india as well as abroad, so this will also be one more revenue for increasing our PVDF volumes going forward, apart from the Li-ion battery application.

27. PVDF film will largely be domestic? - domestic as well as overseas there are large capacities because of climate change imperatives almost every country aggressive plans to increase renewable energy and solar is going to be a mainstay - thus huge increase in demand of production of solar cells worldwide - apart from India there is also a big capacity increase - which is to come but we expect the market to expand in Europe and USA.

28. PVDF films will be at a better margin than PVDF. (value-added products)

29. update on the windmill 25 MW project - 20 megawatts put up by march 31st this year - awaiting Gujarat govt. policy. by end of June we will know for sure the advances which we have paid will be returned to GFL.

30. 4-5 crores per month kind of savings on the 20-megawatt investment 40 % ROCE.

31. Fire took place in a small plant - CAPEX in that plant was about 35 crores - we have a machinery breakdown policy, so we expect to recover that from the insurance claim.

32. PVDF side right now we have 100 tons per month PVDF capacity yeah and going ahead we’ll have 100 tons added by q1 of y23 -June July this year and this will cater to both lithium battery applications as well as the film application.

33. shortage of supplies for EV batteries even in china - most of the battery manufacturing takes place in china, so we are expecting that there will be a demand coming in from china also and from the year 23 onward from the second half of 23 onwards we will expect the increase in demand coming in from USA, Europe and India as EV battery plants capacity keeps on getting added in these 3 geographies.

34. beginning of 24 onwards most of the demand will increase sharply, in year 2023 we expect that there would be demand coming in from china - grades which we have made for qualifications - next few months we should see some qualifications taking place and we will then look at supplying the PVDF binders to china.

35. 2000 tons annual capacity roughly and we were to look at PVDF requirement that’s like roughly 1.6 tons per ton of PVDF so is that right 2 times - 2 tons for 142b for 1 ton of PVDF

36. PVDF is modular - keep on increasing capacities reactor by reactor whereas 142b and the precursor VDC are continuous process plant- so we have to set up a certain capacity plant in any case.

37. Q) are we also looking to make separator coating because we only talk of the binder but I think separator coating will also require PVDF? - Separator do need PVDFs but the volumes are very small in comparison to the PVDF binder. so for the moment we are focusing on the PVDF binders where we have to add substantial capacity.

• What kind of capacity is required for PVDF - globally there are estimates which range from 2500 GWH to 4000 GWH by 2030 and very broadly the PVDF norm varies of course from chemistry to chemistry of each battery but on average about 60 tons per GW so if you multiply 60 ton by 2500 so 150,000 ton of PVDF at the minimum size would be needed only for the battery, by 2030.

38. pricing scenario in the new FP –FKM and PVDF prices substantially increased over the last one year - so given the shortage - PVDF prices would be ranging from $35 to $45 depending upon which application. FKM prices would range from about $28 to about $35 again depending upon the grade.

39. PVDF would also be maybe about $12 but of course PVDF pricing for lithium grade is much higher than prices for the normal usages of PVDF. Lithium grade will be higher than 35 to 45.

40. PTFE - this 25 percent price hike we have taken is on the 100 of the revenue we generated q3? Any annual contracts which are ready to be renewed or any long-term contracts there are certain grades where not taken or was it blanket 25 price rank across the customer across the category? - it will be a blended price increase - PTFE is sold on spot, sold on 1-3-6-12 months - different customers follow a different buying pattern- between 20 to 25 % would be a weighted price increase from the first of January and this entire effect should take in a quarter or will it take a two quarter or three quarter start in this quarter itself.

41. LiPF6 status on plant – env. Clearance - Plant commercial by end of this year - start sampling from that plant - a pilot facility which will be ready by august this year - primarily to ensure that we are able develop the process of using very different kind of ores, as ores can differ from origin to origin - this facility is being created to ensure that we are able to optimize the process which will be utilized in our main plant- after the pilot plant is up - we will start sampling to customers both in India as well as overseas.

42. Timeline approx. to qualify a new grade for EV could take about 6 months to 1 year.

43. For the grades which we have earlier developed - already sent for qualification in to some labs in US and Europe as well as to some customers in South Asia.

44. For the grades which we have already developed we expect that by end of february we would have received the initial feedback from these customers.

45. should the feedback suggest that we still have some gaps to cover then we will do that in our pilot facility and cover those gaps and then send the product back for qualification to the customers.

46. but at this point of time, we have sufficient time before the demand really picks up for EV batteries.

47. Except for China - initial grades are in the process of qualifications and hopefully in the next 1 month we should see some favorable response we might start exporting to Chinese customers for their requirements - so otherwise normally otherwise to develop the grade and to get it fully qualified could be a process which could take almost 1 year. probably by q1 or maximum q2 we should be seeing that some of the products grades already developed we’ll see the customer qualifications and approvals and start contributing to revenue, maximum by q2. Revenue is possible from the second half of this calendar year.

[Anant]

Two updates here:

a) With the ongoing Ukraine crisis, one of the major competitors of Fluorochem, HaloPolymers could be in trouble. As per HaloPolymers website it has 9% of global FP capacity and as per reports 90% of this is exported.

HALOPOLYMER: Russian fluoropolymer producer updates manufacturing | Plasteurope.com.

From the above link:

This could create more shortages in PTFE and other new age FP.

HaloPolymer - АО «ГалоПолимер»

b) The company has received SEIAA approval/EC for its capacity expansion on 17th Feb 2022.

562%2017022022.pdf

Discl.: Invested.

[ganeshrpl]

In this post, I am sharing a few of my notes and observations in my research on the global competitors in this space.

• 350 g of FPs per car is used - such as Seals, gaskets, transmission components, cables, hoses, increasing amounts for Fuel cell membranes, electrolytes, and separators of Li-ion batteries.
• In aeronautics - used for fire retardant coatings, elastomers for gaskets and cables which on average
  are 1km-cables made of FPs per passenger in planes
• IN 2012 - total FP production was 223,000 tons while it’s forecasted to be close to 400,000 tons by 2022.
• production of different classes of FPs as of 2019 were: (source)
  
  
  
  *PTFE dominates the market while FEP is expected to increase much faster than other FPs.
• Per Rupesh’s question above - in one of the attached documents, under Photovoltaics, it was mentioned that the PVDF and PVF (Tedlar by Dupont) are the two commercially available candidates. So, yes there are two variants and the consumers/customers will have to pick from one of those two. On Arkema’s website, it is stated that their PVDF is better as they have a higher content of Fluorine in it.
• Kynar® 3-Layer PGM TR Film: ~59% fluorine in outer layer
• Generic PVDF Films: <50% fluorine and
• Typical PVF Films: < 41% fluorine. Link: Photovoltaic Was curious to find what GFCL had as its Fluorine content in its PVDF, could not find it clearly.

Was going through a few of the competitors out there globally who have a say in the products that GFL manufactures/caters to, to see if they have any Capex plans, what they are saying about the opportunities etc. Below are my notes on Dongyue, Chemours and Arkema: (not exhaustive by any means).

Dongyue Group:

1. During 2020, the Group has completed the R125 expansion project for the refrigerants segment to cope with the growing market demand. During the period, Future Hydrogen Energy completed the first phase of the new proton exchange membrane (PEM) production line, with a production capacity of 500,000 m2, which is now in operation, providing a guaranteed basis for the future marketization of Future Hydrogen Energy’s proton exchange membranes.
2. In terms of fluorinated polymer materials, the Group is constructing 20,000- ton PTFE scale expansion project, which can cope with the current market environment of PTFE supply shortage.
3. it is expected that the first phase of the project, a 10,000- ton polytetrafluoroethylene plant, will be completed in 2021, which will increase the Group’s production capacity of polytetrafluoroethylene by 25% upon completion
4. The projects under construction also include a 5,000-ton FEP project that will double the Group’s FEP production capacity upon completion
5. a 2,000-ton PFA project that can significantly increase the Group’s production capacity for high-end fluoropolymers at a high price level and will create substantial revenue and profit for the Group upon production and market launch
6. the Group will conduct further in-depth research and development on the four major industries of fluorine, silicone, membrane, and hydrogen to extend to the high-end of the industrial chain and promote the application of fluorosilicone materials in 5G, new infrastructure, new energy, and other areas
7. Although the Group has a huge production capacity of R22 and is significantly affected by the quota system, the Group has used the saved production capacity of R22 to the production of fluoropolymer in order to cope with the increasing market demand for fluoropolymer, as R22 can be used as raw material for the production of fluoropolymer. With respect to the shortfall in the refrigerants’ market after the phase-out of R22, the Group had strategic deployment to respond to the shortfall and the Group would continue to strive to strengthen its position as the world’s largest producer of refrigerants. The Group has the largest production capacity of R22 in the world.
8. Over the years, Shandong Dongyue Chemicals Co., Ltd., a subsidiary of the Group, has a worldwide reputation for providing high-quality products, leading the market with its primary products, green environmental refrigerant, which ranked first in terms of size, technology and market share over the world; and it is an excellent supplier to domestic and overseas famous enterprises including DuPont, Daikin, Mitsubishi, Haier, Hisense, Gree, Midea and Changhong.
   Segment wise break up for Dongyue:
   
   

The Chemours:

1. We now manage and report our operating results through four reportable segments: Titanium Technologies, Thermal & Specialized Solutions, Advanced Performance Materials, and Chemical Solutions. Thermal & Specialized Solutions (formerly Fluorochemicals) and Advanced Performance Materials (formerly Fluoropolymers).
   We divided our Fluoroproducts segment into two new reportable segments—Thermal & Specialized Solutions (TSS) and Advanced Performance Materials (APM).
2. Our Thermal & Specialized Solutions (TSS) segment is a leading, global provider of refrigerants, propellants, blowing agents, and specialty solvents. has held a leading position in the fluorochemicals market since the commercial introduction of FreonTM in 1930.
3. Our TSS segment competes against a broad variety of global manufacturers, as well as regional manufacturers in the Asia Pacific. We have a leadership position in fluorine chemistry and materials science, broad scope and scale of operations, market-driven applications development capabilities, and deep customer knowledge. Key competitors for the Thermal & Specialized Solutions segment include Honeywell International, Inc., Arkema S.A., Orbia, and Daikin Industries, Ltd.
4. Developed markets represent the largest consumers of fluorochemicals today. Global middle-class growth and the increasing demand for automobiles, refrigeration, and air conditioning are all key drivers of increased demand for various fluorochemicals.
5. The primary raw materials required to support TSS segment are fluorspar, sulfur, ethylene, chlorinated organics, chlorine, and hydrogen fluoride. These are available in many countries and are not concentrated in any particular region. We pursue maximum competitiveness in our global supply chains through favorable sourcing of key raw materials. Our contracts typically include terms that span from two to 10 years, except for select resale purchases that are negotiated on a monthly basis. Qualified fluorspar sources have fixed contract prices or freely-negotiated, market-based pricing. We diversify our sourcing through multiple geographic regions and suppliers to ensure a stable and cost-competitive supply.
6. Our Advanced Performance Materials segment is a leading, global provider of high-end polymers and advanced materials - as a diversified portfolio that includes various industrial resins, specialty products, membranes, and coatings. Serves a broad range of markets, including consumer electronics, semiconductors, digital communications, transportation, energy, oil and gas, and aerospace, among others.
7. Our APM products are sold under the brand names Teflon, Viton, Krytox, and Nafion. Teflon coatings, resins, additives, and films serve as the key underpinning for a variety of industrial and commercial applications, including semiconductor infrastructure. Viton fluoroelastomers are used in automotive, consumer electronics, chemical processing, oil and gas, petroleum refining and transportation, and aircraft and aerospace applications. Our Krytox-branded lubricants are used in a broad range of industrial applications, including bearings, automotive friction management, and electric motors. Nafion membranes are critical components in chlor-alkali processing and flow batteries, as well as the hydrogen electrolyzers and fuel cells which underpin the hydrogen economy. Key competitors for this segment include Daikin Industries, Ltd., 3M Company, Solvay, S.A., Asahi Glass Co., Ltd., and Dongyue Group Co., Ltd.
8. The primary raw materials required for the Advanced Performance Materials segment are chlorinated organics, hydrogen fluoride, and vinylidene fluoride.
   Could not find info on all their plant capacities easily. above is just my notes from their AR and recent conf calls

Arkema:

• Over the years, the Group has built up unique expertise in materials science, in terms of bonding, coating, and substituting traditional materials with lighter, more sustainable and more efficient ones. Arkema has regrouped these skills into its three Specialty Materials segments (which is roughly 80% of Sales)– Adhesive Solutions, Advanced Materials and Coating Solutions – and in April 2020 presented its ambition to become a pure Specialty Materials player by 2024. the fourth segment is intermediates which is roughly 20% of Sales & is cyclical in nature.

• The Advanced Materials segment includes High Performance Polymers and Performance Additives - To develop this segment, the Group has made major industrial investments, notably in thiochemicals in Malaysia, PVDF in China and molecular sieves in France, as well as some acquisitions, in particular ArrMaz. Last year, we were also able to move forward with our growth investments, including the start-up of the methyl mercaptan unit in Malaysia, the new adhesives plant in Japan, and increased PVDF production capacity in China dedicated to the battery market.

• the Group aims for recurring capital expenditure to average around 5.5% of sales per year, with around 40 to 45% dedicated to growth projects.

• The US$150 million investment announced as part of the partnership with Nutrien to produce anhydrous hydrogen fluoride, the main raw material for fluoropolymers and fluorogases, which will be carried out by Arkema at Nutrien’s site in the United States. Start-up of the unit is expected in 2022.

• In 2020, R&D expenditure totaled €241 million, representing 3.1% of Group sales. R&D expenditure as a percentage of sales varies between businesses. It is higher in specialty areas and particularly in the Advanced Materials segment, where R&D helps find solutions for customers and respond to the major sustainable development trends. Arkema’s R&D teams comprised more than 1,600 researchers in 2020, spread across three regional research and innovation hubs.
  $ 10% for the corporate research program - research efforts on high potential cross-functional areas such as batteries, composite materials and hydrogen storage;
  $ 39% for the Advanced Materials segment - In the field of polymers, the Advanced Materials segment’s R&D develops polyamides, PVDF and PEKK for the lightweighting of structures by substituting metal parts with thermoplastic composites in the automotive or aerospace industry, and are used for new production techniques such as 3D printing which enable optimal design of complex parts.

• Solutions for batteries -
  The Kynar® fluoropolymer, for example, is used in the main components of lithium-ion batteries – in the electrodes as the binder for the active phase and as a protective coating for the separator. These products play a very important role in the battery’s lifespan and performance. They are therefore the focus of continuous innovation. Lithium salts, synthesized from the Group’s various chemistries are also used inside batteries, to move lithium ions from one electrode to the other. Battery manufacturers need lithium salts, like the Foranext® electrolyte, that can withstand the increasingly demanding conditions of use, including high temperatures and rising electrochemical potential.

• Materials for photovoltaic cells -
  Photovoltaic cells are made up of a number of highly technical organic materials that protect the silicium layer from outside elements. Arkema harnesses its performance materials expertise to bring to this market a large number of innovations, such as:

• Apolhya® grafted polyolefins, which are used for the encapsulation or protection of photovoltaic cells;

• Kynar® fluoropolymers, for backsheet protection; and

• Bostik Vitel® polyester adhesives, which are used for binding photovoltaic backsheets.

• Electronics solution platform - its fluorinated electroactive polymers (Piezotech®) caters to electronics segments, such as organic, flexible and printed electronics. - making them central to the development of next-generation sensors (pressure, deformation, infrared, etc.), actuators (haptic, medical, microfluidic, etc.) and flexible transistors for use in various next-generation products such as screens, solid-state cooling systems, energy recovery systems, printed loudspeakers, etc

• Certain Foranext® high-purity fluorinated intermediates play an important role in the various stages of the manufacture of semi-conductors, where they are used to selectively eliminate matter through plasma etching.
  
  

1. Following the start-up in December 2020 of a 50% expansion of fluoropolymer production capacity for battery applications at its Changshu site in China, Arkema announced on 23 February 2021 that it was again investing in this site to increase capacity by a further 35%. The new expansion, which is scheduled to come on stream before the end of 2022, will notably serve the fast-growing lithium-ion battery sector, as well as the water filtration, construction, and industrial coatings and semiconductor markets.

2. Moreover, on 7 June 2021, Arkema announced plans to develop the supply of 1233zd, a new generation of fluorospecialties with no or minimal emissive impact, to support increasing market needs for sustainable solutions in insulation materials and in an emerging application in batteries for electric vehicles. As part of these plans, an agreement to manufacture 1233zd in China was finalized with Aofan, whose initial production capacity of 5 kt/year is expected to start mid-2022. At the same time, Arkema will accelerate its detailed planning of 15 kt/year capacity at its Calvert City site in the United States, which is expected to start end-2023 for an estimated investment of US$60 million.

3. volume growth: Continued strong growth in batteries, consumer goods, electronics, and transportation. Volumes up 13.3% YoY Strong increase in High-Performance Polymers volumes, in particular in batteries, sports, and bio-based consumer goods.

4. To support the exponential growth in demand for lithium-ion battery cell materials in Europe, Arkema also announces a 50% expansion of its Kynar® fluoropolymer production capacity at its Pierre-Bénite site. These polymers are used as separators coatings or as cathode binders. New innovations and product ranges will also be offered, such as Kynar® CTO, the new Kynar® PVDF made from renewable sources. This new extension should come on stream in the first quarter of 2023. (Arkema accelerates its investments in batteries)

5. Jan 21,2022 - Due to strong demand for lithium-ion batteries, and other important markets, Arkema’s previously announced 35% fluoropolymer capacity increase at its Changshu site in China is now revised upwards to a capacity increase of 50%, with no change in the expected start-up date (end-2022).

6. With this PVDF capacity increase, Arkema accelerates its development in China in order to meet the strong demand from its partner customers in the lithium-ion battery business and support the significant growth in the water filtration, specialty coatings, and semiconductor sectors. Arkema, a global leader in PVDF production, also recently announced a 50% PVDF capacity increase at its Pierre-Bénite site in France, which is scheduled to come on stream in the first quarter of 2023.

7. 7 capacity expansions in the last 10 years. ( from their quick 15 min webinars on Electrode binder solution and Separator coating solutions ) link: PVDF Solutions for Lithium Ion Battery

I will share in another post on Daikin, AGC, and Solvay shortly.

[ganeshrpl]

In this below post I am sharing my notes on Solvay, Diakin and AGC.
For these 3 companies, I could not gather a lot of details around current capacity & expansion plans…but have shared notes at a very high level on their biz segments and have concentrated more on relevant areas

Solvay

1. Solvay has the following operational segments:
   

2. For the Materials verticals - In the Automotive market, despite the sharp decrease in sales, polymers continue to replace metal and this will position us well when growth resumes. In addition, the strong demand for Li-on batteries confirms the potential of our Battery Materials platform. At Solvay, we are preparing for the battery market boom. Our Battery Materials Platform aims to achieve €1 billion in market revenue by 2030.

3. They have over 1500 products in the specialty polymers segment in three technologies: aromatic polymers, high barrier polymers, fluoropolymers.

4. Solvay has long-standing agreements with both Boeing and Lockeed Martin, which were renewed in 2020. Our contract with Boeing covers composites and adhesives across all its commercial and defense aircraft programs. Our technologies are critical to Boeing’s strategic program to advance innovation in aircraft design and manufacturing. We are Lockeed Martin’s principal supplier of high-performance materials (with more than 50 products) for their F-35 military aircraft, the U.S. Department of Defense’s flagship program.

5. In the European Battery Alliance, we stand out with our unique value proposition of electrolyte ingredients, electrode binders, separator coatings and metal recovery technologies. The objective of the Alliance is to develop the next generation of batteries by 2030, building an ecosystem across the entire value chain.

6. Solvay is present in the EV and hybrid battery value chain, providing high-performance materials for lithium-ion batteries, from salts and additives for the electrolyte to specialty polymers for the binders and separators.

7. Solvay is reinforcing its leadership in the lithium-ion battery market by increasing its capacity of high performance polymer Solef® PVDF by more than 50% between 2020 and 2022. Solef® PVDF, a high performance material for Li-on batteries, has been awarded the Efficient Solutions label by the Solar Impulse Foundation.

8. The €300 million investment supports a fully integrated and digitalized PVDF operation and will increase capacity at Solvay’s site in Tavaux, France to 35 kilotons – making it the largest PVDF production site in Europe. WIll be ready by Dec 2023. (source). Previously in 2019, they had more than doubled their PVDF capacity in Changshu, China.

• PVDF production at - Tavaux, France West-Deptford, USA and Changshu, China

10. They hosted a Auto battery webinar recently on Feb 2022 - do read this. link
    Couple of note worthy slides:
    

    
    
    
    
    
    
    

11. In their latest conf call in feb, 22 -

• On demand and growth in materials segment - growth was once again driven by automotive, EV batteries, and electronics markets – each with double-digit sales growth. Growth in auto (including batteries) grew by 31% over the full year 2021. And we expect strong growth over the next decade and beyond as we shared with you during the Auto Batteries webcast earlier this month. But this is not the only driver – our polymers are adding real value in a number of key markets. Polymers sold in the electronics sector grew 19%, boosted by semiconductors, electrical components, and smart devices. Sales grew about 11% in healthcare which includes polymers used in medical devices and pharmaceutical packaging.

• on price hikes - this is across the board. Don’t think it’s only PVDF (that contributed to profits due to price hikes). Obviously, we have record sales in batteries almost under allocation. But the rebound in automotive is across the board, including for other high-performing polymers, which go to under the hood application and go to lightweighting despite the chip shortage, as you know. Electronics is boosted by the 5G and smart devices, the mobile phones. So all of this is actually booming within Specialty Polymers.

• An example of PVDF being used in pipes, tubes and hoses for fuel systems (source): Solef PVDF qualities of impermeability and chemical resistance recommend their use in automotive fuel transport systems. A layer of Solef® PVDF within the construction of a multi-layer fuel line enhances the strength, permeation resistance and durability of the hose.

Diakin:

1. Daikin chemicals - activities range from research and development to commercialization, and offer a lineup of 1,800 fluorine compounds including gas, resin, and rubber…

2. Polymers and elastomers －Fluoropolymers showed a sales increase from a recovery in demand in the semiconductor market and the information and communications technology field, including LAN cables. Sales in all regions bested the previous fiscal year. －Fluoroelastomers saw sales grow in the automotive market, and sales in all regions surpassed the previous year. (from AR 20)

3. In their 2019 AR - they forecasted sluggish demand in semiconductor & auto-related products as the respective markets which were entering readjustment phase (and that is what transpired for the next 2-3 years further acerbated by covid.)

4. In the chemicals field, Daikin invested ¥8.4 billion, mainly to increase capacity and meet rationalization objectives. In addition, Daikin America, Inc. made investments of ¥4.0 billion for increasing capacity.

5. in their 2020 AR:
   *As for capital investments, we plan to keep aggressively investing in enhancing production capacity targeting North America, India, and SE Asia—all of which are key markets for the air conditioning business—and growth markets for the chemicals busines.
   *In the chemicals field, Daikin invested ¥9.3 billion, mainly to increase capacity and meet rationalization objectives. In addition, Daikin Fluorochemicals (China) Co., Ltd. made investments of ¥8.5 billion for increasing capacity.

6. The chemicals division is relatively a smaller part of their revenue - 7-9%. Their biggest revenue generator is the air conditioning segment.
   

   

7. During end of July 2021 Daiking announced investment in startup with whom they had collaborated for a few years prior - OCSiAl. Pronounced ‘Oxial,’ OCSiAl refers to four chemical elements: oxygen (O), carbon (C), silicon (Si) and aluminum (Al). Touted as the world’s only manufacturer of graphene nanotubes at a large scale . Graphene nanotubes (also called single wall carbon nanotubes) are one-atom-thick graphene sheets rolled into tubes. Described for the first time by Japanese scientists, this high-performance material enables the creation of products with new properties. They are used for electrochemical power sources, elastomers, paints and coatings, composites and plastics. For example, OCSiAl says its nanotubes are used by all major Li-ion battery makers to develop cells for car manufacturers. OCSiAl and Daikin claim that their combined expertise and know-how “could result in a fundamental shift in the global industry.” The two companies will “develop, produce, and market graphene nanotube solutions for next-generation Li-ion batteries and fluoropolymers,” — which comprise a substantial part of Daikin’s business. source: link1, link2. For those curious minds, I found this video extremely fascinating: link3

AGC

1. The fluoro & spec chem segment for AGC is only 7% of their total sales and its roughly 20% of the chemicals vertical.
   

   
   
   
   

2. AGC manufactures three products, ETFE, PTFE, and PFA using TFE(Tetrafluoroethylene) as a raw material.

3. It has the No. 1 share in the global market for ETFE based on sales. ETFE is their solution to solve for Solar cells and I could not find any reference to PVDF on their portal.

4. In the fuel cell their focus area is in the electrolyte polymer (PEMFC Ionomer) The link to their presentation on the fluoro segment can be accessed [here].(https://www.agc.com/en/ir/library/bizbriefing/pdf/2020_1223efluoro.pdf).
   Gives pretty much the overview of their entire Flurochem space

5. Their list of products can be explored here.

6. From Feb22 results for FY21- In the categories of fluorochemicals and specialty, sales increased from the previous fiscal year because of the recovery in shipments of fluorine-related products for use in automobiles, which had been sluggish due to the COVID-19 pandemic, and the signs of a trend of recovery in shipments of fluorine-related products for use in aircraft from the third quarter of the fiscal year.

7. An interesting, simple, couple of pages on 5G - their products and how they are solving for it - here

8. There are a lot of good material/presentations on their portal here if one is interested in learning about how different compounds fit/satisfy different areas/industries. Note, they are not in PVDF/Solar panels Presentations - AGC Chemicals
   on various PTFE compounds, i loved a good visual of how they go about satisfying various requirements here

[Worldlywiseinvestors]

Interesting update on the supply side for PVDF

News library

[barathmukhi]

@Anant @rupeshtatiya @others

Any idea which of these PTFE charts would apply to Guj Fluoro?

[rupeshtatiya]

[ram1984]

Just trying to understand a bit about PTFE. Recently, the GOI has imposed Antidumping Duty (ADD) on imports of PTFE and its components from China and which seems to have continued again for 5 years.

Before imposing ADD, the Director General of Trade Remedies conducts an investigation to verify the dumping and also invites comments from importers. The application in this case was made by GFL. In their application, they claim as follows -

M/s Gujarat Fluorochemicals Ltd. has filed the application for reviewing the need of continued imposition of anti-dumping duty on PTFE. There is one other producer of PTFE in the country, apart from the applicant, namely, Hindustan Fluorocarbons Ltd. The applicant however continues to be a major producer of the subject goods in India and commands 99% share in the Indian production in the POI and, therefore, constitutes the domestic industry.

Based on the information on record, the Authority notes that the applicant constitutes 99% of the total domestic production. Further, the applicant has not imported the subject goods during the period of investigation and is not related to any exporter or producer of the subject goods in the subject country or any importer of the product under consideration in India. Accordingly, the Authority holds that the applicant constitutes domestic industry under Rule 2(b) of the Rules and the application meets the requirements of ‘standing’ under Rule 5(3)

So are there no manufacturers of PTFE. I was under the impression that Navin Fluorine, SRF are also into this products.

FF PTFE NCV Signed.pdf (872.6 KB)

[Anant]

Please read the thread from beginning and hopefully you will get your answers.

[ram1984]

Earnings%20webcast%20presentation%20-%20Q2%202022.pdf

[ram1984]

Solvay 2022 first half results.pdf (402.6 KB)

Solvay raises full year guidance following strong performance driven by higher volumes and prices

https://www.solvay.com/en/press-release/solvay-2022-first-half-results