SKC Seeks Commercialization of High-growth, High Value-added Film for Automobiles (PVB Film)

Exchanges Letter of Intent to Establish Joint Venture with Subsidiary of China's Largest State Petrochemical Company



● To pursue an advance into the PVB film market by combining SKC's PVB film technology with SVW’s competitiveness in raw materials

● To establish a joint venture in this year’s second half → Aims to secure 30% share of PVB film market for automobiles by starting commercial production in Q1 of 2019



SKC (Lee Wan-jae, CEO) is joining forces with Sichuan Vinylon Works (SVW), a subsidiary of China Petrochemical Corporation (Sinopec), the largest state-run petrochemical company in China, in order to enter the market of Polyvinyl Butyral (PVB) film, a high growth, high value-added glass bonding film.

[LOI signing ceremony for PVB film joint venture. SKC CEO Lee Wan-jae is center left in the photo.]

SKC and SVW exchanged a letter of intent (LOI) on the establishment of a joint venture (JV) that will produce raw materials (resin) for PVB film in Chongqing, China on May 24. For starters, the two companies agreed to make PVB film production facilities at SKC's Nantong film plant in Jiangsu Province, which serves as SKC’s film production _ base_ in China, and to continue to expand the facilities thereafter. SKC will provide technology for PVB film manufacturing, and SVW will supply PVB film raw materials. This way, the joint venture will establish vertical integration, ranging from raw materials to products, to secure a competitive edge in the market. 

PVB film is an essential safety film used in bonding glass for automobiles and buildings and is designed to protect people in the event of an accident. The film is placed between glass s, and serves to hold glass pieces together to prevent them from shattering when the glass breaks. The film is also drawing attention as a high value-added product because it can be used for heads-up displays and it reduces noise, heat, and ultraviolet rays.


PVB film market steadily grows: High-performance products market dominated by three global companies


The PVB film market has been steadily growing to reach about 380,000 tons worth 2.6 trillion won in 2015. Notably, the market for products with high-performance functions, such as noise isolation, is growing robustly at an average annual rate of 20 to 30%. However, the global market for high-performance products is being dominated by three global companies. 

[Market shares of PVB film for automobiles by product (left), and trend of noise insulation film production by three global companies (source: Fuji Chimera)]


SKC paid attention to the growth potential of the PVB film market. Banking on its 40 years of experience with film manufacturing and processing, the company has been conducting research and increasing development since 2012. Apart from the global big three, SKC is the only company that has passed the strict performance uation tests required by automobile and glass manufacturers in the automotive PVB film market.


SKC to use China’s largest state-run firm’s network in the Chinese market, and SKC's network in the global market


If the two companies’ efforts bear fruition, they will launch a joint venture in the second half of this year, and start commercial production in the first quarter of 2019. The joint venture will manufacture and sell PVB resin and PVB film, as well as conducting R&D. SKC will advance into the Chinese market, which is the world’s largest growth market, by leveraging the network of China's largest state petrochemical company, and tap global automakers to secure supply by developing high-performance products. The global automobile manufacturers' network that SKC has already secured is expected to give a big boost to its efforts.


"SKC has past experience in establishing joint ventures with competitors such as SKC Kolon PI and MCNS and achieving successful outcomes," an SKC official said. “Based on the successful cooperative relations between SK and Sinopec Group, we will try our best to ensure that the latest LOI will lead to the successful launch of a joint venture so as to secure a 30% share of the global film market for automobiles."


Going forward, SKC will continue to expand its business in promising new film materials in not only the automotive sector but also next-generation display, construction, and semiconductor fields. [End]