DL Chemical Enters Eco-Friendly High-Value-Added 'Hot Melt Adhesive' Market

Yeosu Industrial Complex DL Chemical Factory Exterior View

[Asia Economy Reporter Onyu Lim] DL Chemical is entering the eco-friendly adhesive business to produce high value-added products and secure future new growth engines.

DL Chemical announced on the 15th that it will enter the hot melt adhesive market by establishing a joint venture with US-based Rextec. DL Chemical will hold a 74% stake in the joint venture. Hot melt adhesives are adhesives that can be melted and bonded with heat, widely used in hygiene products such as diapers and sanitary pads, automotive interior and exterior materials bonding, and assembly of various industrial products.

The two companies have decided to invest 150 billion KRW in the Yeosu petrochemical complex to build and operate a production plant for amorphous poly alpha olefin (APAO), a hot melt adhesive material, and adhesives with an annual capacity of 40,000 tons. APAO is gaining attention as an eco-friendly adhesive material harmless to the human body. The plant will apply Rextec’s latest manufacturing technology. Construction will start this year, with commercial production planned for the first half of 2023.

The global hot melt adhesive market grew to 10 trillion KRW last year due to increased use of hygiene products, automotive lightweighting, and contactless consumption. It is expected to reach 13.5 trillion KRW by 2025 with stable annual growth of over 6%.

Through this joint venture, DL Chemical has established a foothold to enter the adhesive market. The company plans to actively utilize its own global network to expand business into global markets such as Asia and Europe. In addition to job creation and export increase effects, it is expected to contribute to enhancing national competitiveness through localization of hygiene adhesives currently dependent on imports and training of adhesive specialists. In particular, to strengthen ESG management, DL Chemical plans to continuously expand its adhesive business by developing ‘high-performance eco-friendly adhesive materials’ by applying its proprietary technology.

Last year, DL Chemical expanded its business portfolio into high value-added specialty fields by acquiring Cariflex, the world’s No. 1 manufacturer in medical synthetic rubber materials. The company’s strategy is to continuously strengthen its specialty product lineup and reinforce its portfolio in advanced materials.

Rextec is the world’s third-largest manufacturer of APAO adhesive materials and adhesives. It operates its headquarters and production facilities in Texas, USA. Its major customers include global companies such as P&G, Kimberly-Clark, Henkel, and H.B. Fuller.

Kim Sang-woo, Vice Chairman of DL Chemical, explained, “Adhesives are a high-growth, high-profit material business with high entry barriers,” and added, “This investment is in line with DL’s business strategy to foster advanced chemical materials business, and we will develop the adhesive business to a world-class level.”