Kraton (KRA) To Construct Semi Works Latex Unit In Brazil

Kraton Corporation (NYSE:KRA) is set to build a semi works latex unit in Paulinia, Brazil. The construction is slated to complete by first-quarter 2020 and is expected to be ready for commissioning during second-quarter 2020.

The company stated that the new semi works unit will accelerate innovative projects. Moreover, it can minimize the complexity and cost during early stages of new product scale-up activities and commercialization. This will enable the company to improve time-to-market.

The capability may also lead to more flexible commercialization of the new Cariflex IR2GL1 Latex. Notably, this is a next generation of thermoplastic elastomer latex that offers strength, purity and softness as well as reduces Type I and Type IV allergies, which are frequently encountered in dipped goods.

Moreover, the platform will enable more efficient transition between the full-scale commercial and the laboratory pilot units. It may be used for early stage commercialization volumes and also offer significant support to the context of Management of Change like process control studies as well as alternative raw material assessments.

The semi works latex unit will be capable of operating on Direct Connect (DC) mode or non-DC mode using solid polymer feedstock. In DC mode, it will directly pump polymer materials from the onsite commercial polymerization reactor and provide tremendous flexibility.

Kraton believes that Cariflex technology has high growth potential. The platform will boost the company’s ability to capitalize on key market opportunities through product portfolio expansion.

Notably, the company initiated a process to review strategic alternatives for the Cariflex business that may result in its divestiture.

Kraton, which is among the prominent specialty chemical producer including Ingevity Corporation (NYSE:NGVT) , W.R. Grace & Co. (NYSE:GRA) and American Vanguard Corporation (NYSE:AVD) , projects adjusted EBITDA for 2019 to be $370-$390 million.

According to the company, the guidance assumes recovery under its business interruption policies. This is expected to offset any lost margin in first-quarter 2019 related to Hurricane Michael at the site in Panama City, FL. Kraton envisions significant volume growth and margin expansion across its segments.

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