SKC Embarks on Independent Venture in Polyurethane Raw Material Business

[Asia Economy Reporter Hwang Yoon-joo] SKC has agreed to terminate its joint venture contract with Japan's Mitsui Chemicals for MCNS and will independently pursue growth in the polyurethane (PU) raw materials business. SKC plans to enhance its business competitiveness and increase market share by making the surviving company a 100% subsidiary and expanding its global presence.

SKC held a board meeting and decided to terminate the contract for MCNS, the polyurethane raw materials joint venture established with Mitsui Chemicals in 2015. Mitsui Chemicals also held a board meeting on the same day and approved the same resolution. The termination will be carried out by recovering the invested assets by May next year at the latest. Afterward, the surviving company will start anew as a 100% subsidiary of SKC. Both companies agreed to continue their cooperative relationship even after the contract termination.

Since the establishment of MCNS in 2015, both companies have maximized synergy with the goals of entering growth markets, expanding new businesses globally, and improving profitability. MCNS expanded its system house producing customized PU raw materials from China, the United States, and Poland to Mexico, India, and Russia, increasing its annual production capacity from 60,000 tons to about 110,000 tons. In particular, sales of high value-added PU raw materials more than doubled.

However, there were strategic differences in the business directions of the two companies. SKC emphasized growth such as global expansion, while Mitsui Chemicals preferred steadily increasing profits through high-performance and bio products. After careful consideration, both companies judged that it would be more appropriate to pursue their businesses according to their respective strategies and agreed to terminate the contract.

After the contract termination, SKC will focus on global expansion and eco-friendly business growth of the surviving company. First, it will further enter Southeast Asia, Latin America, and the Middle East to increase global market share. It will also strengthen its eco-friendly materials business to contribute to solving the plastic waste issue. Representative examples include the bio PU raw materials business using castor oil instead of petroleum-based raw materials and the Repolyol business that recycles waste PU as raw materials. The goal is to achieve sales exceeding 1 trillion KRW by 2025.

An SKC official said, "Even after the contract termination, SKC will continue cooperation with Mitsui Chemicals to enhance global competitiveness while strengthening the eco-friendly materials business, pursuing growth and ESG management simultaneously to increase corporate value."

PU is widely used as insulation materials for automotive interiors, LNG and LPG ships, among others. Recently, with the advent of the electric vehicle era, MCNS's self-developed noise and vibration reduction products and low-density lightweight products have also attracted attention. SKC has actively developed the PU raw material polyol business through MCNS and the PO raw material business for polyol through SK PIC Global.