Press Releases

July 30, 2003
Asahi Kasei Corporation

Basic accord has been reached for the transfer of the industrial nitrocellulose business of Asahi Kasei Corporation to Bergerac NC (BNC) of France, a subsidiary of the state-owned Groupe SNPE.

The industrial nitrocellulose (NC) business of Asahi Kasei dates from 1934, following Japan’s first commercial synthesis of ammonia at our Nobeoka plant in 1923 and the subsequent development of operations in a variety of chemicals derived from ammonia, nitric acid foremost among them.

NC is produced by treating cotton linters or wood pulp with a mixture of nitric acid and sulfuric acid. NC with a high nitrogen content is used to produce explosives, while industrial NC, having a lower nitrogen content, is used to produce a wide variety of industrial materials. In contrast to other cellulose derivatives, industrial NC enables high coating strength and surface hardness with excellent dryability and pigment dispersion. The principal applications for industrial NC are paint and ink, which combine for 80% of demand in Japan. Industrial NC is also used in a range of other fields including cosmetics such as nail polish, and the magnetic coatings of tapes and cards.

The Japanese market for industrial NC in fiscal 2002 was some 6800 tons, with 4400 tons produced domestically and 2400 tons imported. There is a marked trend of increasing imports even as domestic demand declines. Asahi Kasei is Japan’s only producer of industrial NC, with a 52% domestic market share; fiscal 2002 sales of industrial NC were ¥2.4 billion, with sales volume of 5700 tons.

Falling domestic demand in recent years has been precipitated by the relocation of production operations of many users to overseas bases, including a notable shift of wooden furniture manufacturing to Southeast Asia, and the increasing use of alternative materials such as polyurethane coatings and water-based inks. The rise of low-cost industrial NC imports has resulted in declining domestic sales prices, and the low market prices overseas have made profitable export from Japan extremely difficult. Given that these trends are only projected to intensify, it was determined that prospects for the continuing viability of industrial NC operations based on domestic production were faint, and the decision was made to transfer the business to BNC, the world leader in the field.

Outline of transfer
Conclusion of transfer agreement: By end of September, 2003.
Subject to transfer: Trade rights, technology, certain production equipment.

After the date of transfer, Asahi Kasei will supply industrial NC to BNC on an OEM basis until March 31, 2004, when the plant at Tohmi, in Nobeoka, will be closed. The plant will then be dismantled, and equipment not subject to transfer to BNC will be disposed of. Asahi Kasei technology for industrial NC will be transferred to BNC, and Asahi Kasei will support its users in the transition to BNC product. Sales of BNC product in Japan will be handled by SNPE Japan, a Groupe SNPE subsidiary.