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INEOS to Invest in Oxo Derivatives Production Units, FTC Bans Unqualified VOC-free Claims by Paint Companies, BCF Earns Trade Association of the Year Award

SpecialChem / Mark Drukenbrod – Jul 25, 2017

Hello and welcome to your early week international coatings industry update, brought to you by SpecialChem. In industry news since last issue, AkzoNobel is planning to double capacity for organic peroxides in China and Avantium announced that it is opening a new pilot biorefinery in Delfzijl, the Netherlands. MIT engineers have designed a gel-like material that can be coated onto standard plastic or rubber devices and Gen3Bio announced that it is developing a process to transform microalgae into bio-based chemicals. There’s much more where we continue and as always, you can go to the above items now using the links, or checkout our latest stories, which we’ll get to right away…

INEOS to Invest in Production Units for Oxo Derivatives

Following the recent acquisition of Arkema’s 50% share of Oxochimie, INEOS Oxide has completed a strategic review of the business. It will invest in INEOS Oxide units to produce a variety of oxo chemical derivatives including 2-ethyl hexanoic acid and polyalcohols. The site of the expansion has not yet been identified but is likely to be on a core INEOS site in Belgium, Germany or France. Graham Beesley, CEO INEOS Oxide, commented: “This is a significant growth project for INEOS. This new range of oxo derivatives complements our existing product offering and builds on our recent acquisition of Oxochimie. INEOS Oxide is pleased with the speed at which Oxochimie has been fully integrated and we are now looking for the logical next step to grow the business.”

FTC Bans Unqualified VOC-free Claims by Paint Companies

Four paint companies have agreed to settle Federal Trade Commission charges that they deceptively promoted products as emission-free or containing zero volatile organic compounds (VOCs), including during and immediately after application. Some promotions also made explicit safety claims regarding babies, children, pregnant women, and other sensitive populations. However, the FTC alleged, the companies had no evidence to support these claims. The four companies, Benjamin Moore & Co., Inc., ICP Construction Inc., YOLO Colorhouse, LLC, and Imperial Paints, LLC, have agreed to orders that would bar them from making unqualified emission-free and VOC-free claims unless, at all times during application and after, both content in and emissions from their paints are actually zero, or emissions are at “trace levels,” as defined in the orders. The settlements also prohibit the companies from making other unsubstantiated health and environmental claims, and ensure that two of the companies disclose that seals appearing in their promotional materials are their own designations.

BCF Earns Trade Association of the Year 2017 Award

The British Coatings Federation (BCF) beat over 300 other trade associations in the UK to be crowned ‘Trade Association of the Year 2017’, the ultimate accolade for Trade Associations in the UK. This award recognizes the continued development of the Federation. It is now recognized as best in class amongst trade associations across the UK. The BCF also won ‘Marketing Campaign of the Year’ for the ‘DIY Safe Antifouling Initiative’, and were highly-commended in the ‘Magazine of the Year’ category, for the coatings industry magazine ‘Covered’. Linda Cavender, Chief Executive of the Trade Association Forum said: “BCF have had another outstanding year, growing from strength to strength addressing their members’ needs, undertaking some great lobbying activity and achieving record levels of growth.”

On Your Coatings Radar – Büchner Resigns from AkzoNobel, Will be Missed

This week, the chief executive officer of AkzoNobel resigned with immediate effect on health grounds just weeks after fending off a takeover attempt. Ton Büchner, who joined Akzo in 2012, spent five years turning the company into a leaner and more profitable venture while plotting the path forward for the Dutch paint and chemical powerhouse.

“For me this was an extraordinarily difficult decision to make but my focus must now be on my health,” said Mr. Büchner, 52. The health reasons behind his departure were not specified. In 2012, however, less than six months after starting as chief executive, Mr. Büchner took a leave of absence for several weeks after being diagnosed with what at the time was identified as “fatigue”.

The Dutch company named Thierry Vanlancker, also 52, who most recently ran the company’s specialty chemicals division, as its new CEO.

“It is with great regret that Ton is stepping down due to health reasons,” said Antony Burgmans, chairman of Akzo’s supervisory board. “He has been an outstanding leader for Akzo Nobel, transforming the company and setting it up for future success. His focus on delivering for our customers. Operational excellence has driven profitability to record levels, increasing returns to shareholders.

The resignation came on Tuesday, Mr. Burgmans said, adding that Akzo was able to trigger a contingency succession plan it already had in place.

Büchner’s resignation may pose a bit of a problem for Akzo, because a shareholders' meeting to approve his replacement could open the way for a vote on chairman Antony Burgmans, who is under pressure by some activist shareholders for rejecting the recent PPG takeover bid. Faced with possible shareholder discontent, Akzo has yet to announce when it will ask shareholders to approve Vanlancker as new CEO. "We will go through the shareholder approval process in due course," Akzo Nobel spokesman Leslie McGibbon said on Friday to The New York Times.

Thierry was most recently head of Specialty Chemicals at AkzoNobel, having joined the company in 2016. A Belgian national, prior to joining AkzoNobel he was President – Fluoroproducts for Chemours, the spin-off company of DuPont's chemical businesses formed in 2015.

‘’His passion for the business and personal commitment has helped create a strong culture across the company. He will be greatly missed in the Boardroom and by many colleagues of AkzoNobel around the world. I wish Ton well and hope he is now able to focus fully on his own health.

‘’AkzoNobel remains focused on delivering for our customers every day. In Thierry Vanlancker we have an outstanding executive who is well placed to continue building momentum for the company. This includes the creation of two focused businesses, delivering sustainable growth and profitability.

‘’His extensive experience in the chemicals and coatings industry gives him a unique perspective and I look forward to continuing to work with him in his new role as CEO.”

Ton Büchner, commented, “It was a privilege to work for AkzoNobel and I am extremely proud of all the achievements the team delivered during my five years at the company. AkzoNobel is full of highly engaged, talented and passionate people who deliver every day for our customers and I want to thank all of them for their contribution and support over the years.

‘’Our commitment to value creation, sustainability, innovation and the communities in which we operate is a major driver of our success.

“Thierry Vanlancker is a great addition to the team and is well placed to take AkzoNobel forward, delivering long term value creation for all stakeholders. I wish Thierry all the best.

Thierry joined DuPont in 1988 and held a number of senior positions both in Europe and the US, including Vice-President Performance Coatings and Business Manager of Refinish Systems across Europe, Middle East and Africa.

A successor for the Head of Specialty Chemicals will be announced in due course.

On Your Coatings Radar - EU Rule Change Contributes to UK Smell Problem

Here’s a paint problem that got many an unsuspecting kitty-cat in the UK into hot water with their owners -- paint smelling like a poorly maintained litter box. Although it usually occurs with the more dramatic “can hissing and explosion in the warehouse” symptomology, the retailers at B&Q in the UK recently ran into a problem when a significant amount of Valspar paint started stinking after application and curing in customer homes. Recently, hundreds of these customers who sourced the product from B&Q plc, the British multinational DIY and home improvement retailing company who complained that its paint smells like cat’s urine will be compensated, the retailer has confirmed. Apparently, the awful smell has been emanating from walls and other objects that have been covered with the paint – and it is said to get even worse in very hot summer weather.

Confused customers have apparently gone to extraordinary lengths to rid themselves of the smell, cleaning carpets and bedding before realizing that it was actually just-applied paint. Valspar said the problem had been caused by the removal of a preservative from the paint. It has since been reinstated.

B&Q said that it will compensate customers who purchased the paint, although the exact terms remain unclear. The retailer said that the walls should be coated with two coats of alkaline sealer before being repainted with the customer’s chosen color.
Preservation components in paint formulations are getting trickier to implement, especially since governments are more frequently legislating against the use of some paint preservatives. Changes to EU law, which restricts the types of preservatives paint manufacturers can use, means the problem is becoming more common. Bacteria grow in the can and release hydrogen sulfide gas (which is a rotten egg smell), and ammonia (which is a urine smell).

In a statement, Valspar said: “The ammonia-type odor occurs very rarely and when used on walls that are particularly porous, and where the wall is exposed to excessive heat or direct sunlight. The odor naturally wears off over time.”

“We are working with B&Q to support our customers. We apologize for any inconvenience caused and ask that anyone similarly affected contact B&Q’s Customer Services.”

BYK to Build New Integrated Site in Shanghai

BYK Additives & Instruments, one of the world’s leading suppliers in the field of additives and measuring instruments, yesterday held a groundbreaking ceremony for its new integrated site located in Shanghai Chemical Industry Park.

The company is investing over 30 million euros in the new site, which combines R&D, technical services, logistics, and administrative functions under one roof and forms the basis for the continued expansion of BYK's business operations in Greater China and the whole Asia-Pacific region.

The ceremony was attended by Jinhua Hou, Deputy Director of Shanghai Chemical Industry Park Administrative Commission; Gerd Judith, Managing Director BYK Additives & Instruments; Albert von Hebel, BYK’s Chief Financial Officer; and Dr. Dechun Fu, Managing Director BYK Greater China, as well as other distinguished guests.

"As a major step forward for our company, the construction of the integrated site in Shanghai is of strategic significance for the future long-term development of BYK and the ALTANA Group at large. This investment will ensure our long-term leadership in terms of R&D, customer services, manufacturing, and logistics capabilities, providing optimum products and services to our customers," says Dr. Fu Dechun, Managing Director BYK Greater China.

Gerd Judith draws particular attention to the planned application laboratories that will conform to BYK’s global standards: "We will be equipping the labs with advanced chemical synthesis equipment and precision analytical instruments and bolstering the local R&D team. We also plan to gradually introduce the latest technologies, customizing products to meet local customers’ needs".

The construction of the new site, which covers an area of over 50,000 square meters is scheduled to become operational in the second half of 2018.

BYK has recorded a healthy growth in recent years. The company has also enriched its polymer additives production lines through the acquisition of Addcomp Holland BV and PolyAd Services. In 2016, BYK's global sales reached 909 million euros, with double-digit growth in sales achieved in Greater China.

PPG to Acquire Coatings Application Services Provider Crown Group

PPG announced Thursday that it has reached a definitive agreement to acquire The Crown Group, a U.S.-based coatings application services business, from High Road Capital Partners and Charter Oak Capital Partners. The transaction is expected to close in the third quarter 2017, subject to customary closing conditions. Financial terms were not disclosed.

Crown, headquartered in Warren, Michigan, USA, is one of the leading component and product finishers in North America. The company applies coatings to customers’ manufactured parts and assembled products at 11 U.S. sites. Most of Crown’s facilities, which also provide assembly, warehousing and sequencing services, are located at customer facilities or positioned near customer manufacturing sites. The company serves manufacturers in automotive, agriculture, construction, heavy truck and alternative energy industries.

“Crown is a leader in coatings application and this acquisition will enhance PPG’s ability to service its original equipment manufacturer (OEM) customers,” said Viktor Sekmakas, PPG executive VP. “PPG continues to help customers simplify this portion of the product finishing process, enabling them to focus on their core competencies of product design and manufacturing. Our growing coatings application services capability allows PPG to have a more intimate understanding of our manufacturing customers’ coatings needs and offer enhanced, end-to-end solutions and services.”

Axalta Makes Binding Offer to Acquire European and Chinese Operations of IVA

Axalta Coating Systems, announced last week that it has made a binding offer to acquire the European and Chinese operations of IVA, one of the world’s leading wire enamel manufacturers, from its parent company Superior Essex.

IVA, which has been in operation since the late 1930’s, develops and produces the latest innovations in wire enamels used to insulate electrical equipment and components. IVA is well known for its broad portfolio of high performance, high quality wire enamels including top coats and self-bonding products. These include state-of-the-art insulating technologies used in the manufacture of e-mobility technology, renewable energy applications, medical equipment, household appliances, and industrial and automotive applications, among others.

“We look forward to welcoming IVA into Axalta,” said Michael Glomp, Axalta’s Global Vice President, Energy Solutions. “IVA’s single-minded focus on continuous innovation, quality and customer fulfillment is well aligned with Axalta’s values, and we look forward to offering our customers enhanced insulating enamel solutions at the cutting edge of magnet and electrical wiring technology.”

“The sale of IVA France and IVA China will allow Superior Essex to focus on its core competencies, while creating an opportunity for IVA to further enhance its enamel solutions and offerings in partnership with Axalta,” said Brian Kim, CEO, Superior Essex. “We are excited to see all that this partnership will bring to the marketplace.”

The transaction includes IVA manufacturing sites in Meyzieu, France and Changzhou, China, which is operated through a joint venture with a local minority partner.

Merck KGaA Opens New Application Laboratory in Shanghai

Merck KGaA, Darmstadt, Germany, a leading science and technology company, announced the opening of its new application laboratory for the Performance Materials business sector today in Shanghai, China. The expanded Technology Application Network China (TANC) underscores the company’s leading position in pigments and functional materials. It marks the continuation of a 20-year commitment of supplying materials and application technology services to China and Southeast Asia for products that make people’s lives better and more beautiful.

The new, expanded application laboratory at the Jinqiao site in Shanghai’s Pudong district is the first application laboratory in China that Merck KGaA, Darmstadt, Germany, launched to deliver comprehensive, customized services for its quality products and to seek and foster creative collaboration with customers for new applications and formulations. This collaboration began in 1998 with the opening of the first site at Fudan University in Shanghai, based on the example of our Customer Support Center. The TANC initially focused on print applications, with three expansions over the years leading to additional application fields – ranging from plastics, coating, and cosmetic applications, to dispersion paints and powder coating technologies, to quality control and cosmetic testing. China is one of the fastest- growing markets for our pigments and cosmetics businesses. Many of China’s most popular and best-known brand manufacturers rely on pigments and functional materials from Merck KGaA, Darmstadt, Germany, and tap into the TANC when developing new products.

The underlying TAN (Technology Application Network) is a global unit with more than 100 employees in central competence centers who provide the market regions with technical consultation and access to application technology laboratories. Within a split of a second, information can be transmitted from one site to another via a global network, allowing the sites to benefit from each other.

Thanks to expansion of the TANC in Shanghai, Merck KGaA, Darmstadt, Germany, can meet the growing number of customer requests for close collaboration and technical consultation on the entire product portfolio of pigments and functional materials and especially on how to integrate these products in new technologies. This includes the use of pigments in high-temperature ceramics, RGB printing, and waterborne coatings or the application of polysilazanes. In addition, more and more customers are expressing a wish for local training. It thus made sense to establish a customer experience center for workshops in a creative environment and with good connections to a lab.

The TANC’s core tasks are to evaluate R&D materials according to customer specification, develop demo tools and steer their production, scientifically support products with lectures and publications, provide training for employees and customers, and perform supportive work for quality control and production. “The new TANC boosts our capabilities for supporting China and the surrounding region,” said Friedhelm Felten, Executive Vice President and Head of Pigments & Functional Materials, about the latest visible signs of continuous investments by Merck KGaA, Darmstadt, Germany, in China over many years. “We’re pleased that we can now offer our Chinese customers even more capacities to make their customers’ color dreams come true – from automotive coatings to printing, architecture, and cosmetics. Furthermore, we’re expanding their possibilities by providing technical services for functional materials, such as for laser marking or security applications.” This reflects our customer-centric approach of not only developing high-quality raw materials for innovative products in line with market requirements and making them available to its partners, but also delivering the related innovative technologies and applications.

BASF Starts Production of DOTP Plasticizer at Pasadena, Texas Facility

BASF started the production of Palatinol® DOTP (dioctyl terephthalate), a general purpose plasticizer, at its Pasadena, Texas facility, with a nameplate capacity of 60,000 metric tons per year. The plant enables BASF to respond to the growing demand for non-ortho-phthalate plasticizers in North America, and strengthens its position as a reliable source for DOTP.

In addition, operations started at an oxo alcohol unit for 2-EH (2-ethylhexanol) at the Pasadena site, with a nameplate capacity of 100,000 metric tons per year. This secures consistent raw material integration for Palatinol DOTP, while also strengthening the reliability of BASF’s 2-EHA (2-ethylhexyl acrylate) production at the company’s site in Freeport, Texas.

“The new capacities provide increased potential for BASF in the non-ortho-phthalate plasticizers market,” said Heather Remley, Senior Vice President, Petrochemicals North America. “Production at our Pasadena facility reinforces BASF as a valued supplier and reliable partner for plasticizers in North America.”

As part of its global production network, BASF offers a broad portfolio of plasticizers, including general-purpose plasticizers, and specialty plasticizers, such as adipates, polymerics, and trimellitates.

Manufacturers use plasticizers to soften and increase the flexibility of rigid PVC (polyvinylchloride). With Palatinol DOTP, a terephthalate, in its portfolio, BASF offers effective solutions to producers of vinyl film and sheet applications for flooring, coated fabrics, and wire and cable coatings.

Masco Coatings Group to Move HQ

Santa Ana, California, USA-based Masco Coatings Group will move its headquarters to a new Santa Ana facility next year. Masco operates roughly 60 manufacturing facilities in the U.S. Its brands include BEHR and KILZ.

The company will move during the second quarter of 2018. It has been in its current headquarters building for 30 years.

“Our current Segerstrom facility has served us well for 30 years, but we’ve long since outgrown it,” said Jeff Filley, president of Masco Coatings Group, in a statement. “This relocation will enable us to move a majority of our Santa Ana-based employees from four locations into one building and create an energized environment that accelerates innovation and synergies across our organization.”

The new headquarters will have a research and development laboratory, fitness center and features to help with cross-team collaborations, the company said.

Roughly 700 employees will be transferred to the new building.

The new 225,000-square-foot building is part of a 370,000-square-foot compound at 1801 East Saint Andrew Place. Masco Coatings Group’s current facility is 56,000 square feet.

RPM Acquires Key Resin

RPM International Inc. Friday announced that it has acquired Key Resin Company, a manufacturer of polymer flooring and coating systems. It will operate as one of RPM’s Euclid Group of companies. Headquartered in Batavia, Ohio, Key Resin has annual net sales of approximately $25 million. Terms of the transaction, which is expected to be accretive to earnings within one year, were not disclosed.

Key Resin manufactures and markets terrazzo and resinous flooring, wall coating systems, concrete repair materials and maintenance products for industrial, institutional and commercial applications. It sells directly to contractors and facility owners, enabling Key Resin to provide highly insightful and responsive customer service and technical support. The company primarily serves the North American market.

The Euclid Group is a world-leading manufacturer of specialty chemical products for the global construction and engineering industries. Its global product portfolio includes admixtures, concrete fibers, grouts, mortars, screeds, adhesives, concrete sealers, sealants, protective coatings, flooring systems and waterproofing membranes, among many other construction products.

“Key Resin fits right within our sweet spot for acquisitions. It’s a well-run, family-founded specialty coatings business that is a market leader,” stated Frank C. Sullivan, RPM chairman and chief executive officer. “This transaction expands our Euclid Group’s flooring systems product offering and market share in North America, and positions it as a significant player in terrazzo flooring. Key Resin will continue to be run by Jeff Cain, a second-generation family leader of the business, and his strong management team.”

AkzoNobel to Expand Organic Peroxide Capacity in China

AkzoNobel’s Specialty Chemicals business is working on plans to double production capacity at its organic peroxides facility in Ningbo, China, during the next two years.

A project to boost the capacity by 40% is already underway, which is expected to be completed by mid-August. The company is now considering a larger scale expansion which would increase current capacity by 100%. The site produces dicumyl peroxide (DCP), an organic peroxide used as a crosslinking agent in the manufacture of polymers.

“Demand for our products is growing rapidly and expanding our existing facilities provides a great opportunity to meet the needs of our global customers,” said Johan Landfors, Managing Director for AkzoNobel’s Polymer Chemistry business.“ This expansion will allow us to further grow in our market and solidify our position as the world’s number one producer of organic peroxides.”

DCP is a crosslinking agent used to produce a variety of polymers with exceptional durability. These polymers can be found in many different products, such as shoe soles, a market which has been growing in developing countries in particular. DCP is also used in polymers for insulating high-voltage cables, which are in growing demand to upgrade electricity networks and connect offshore wind parks and other sources of renewable energy.

“We are committed to our customers and to retaining our leadership position in the industries we serve, including organic peroxides,” added Thierry Vanlancker, AkzoNobel’s Executive Committee member responsible for Specialty Chemicals. “By continuing to invest in our existing operations and focusing on operational excellence, we will be able to provide reliable supplies to accommodate the growth of our customers.”

Opened in October 2016, the Ningbo DCP plant is the largest of its kind in the world. The multi-site employs approximately 500 people and houses operations for several of AkzoNobel’s Specialty Chemicals business units. AkzoNobel is also building a new organic peroxides plant in Tianjin, ensuring the company’s long-term commitment to the industry in China.

Axalta Coating Systems Implements Titanium Dioxide Surcharge on Selected Products

Due to continuing significant price increases in the cost of titanium dioxide over the past six months, Axalta Coating Systems will impose a price surcharge for coating products that contain this critical raw material.

The surcharge will be applied to specific products sold in all regions of the world and is independent from any pricing actions due to the long-term rise in the cost of producing resins and other key components of Axalta products. The titanium dioxide surcharge will take effect on all orders received after August 1, 2017.

LyondellBasell to Build the World's Largest PO/TBA Plant in Texas

LyondellBasell Friday announced the final investment decision to build the world's largest propylene oxide (PO) and tertiary butyl alcohol (TBA) plant in the Houston area. The project is estimated to cost approximately $2.4 billion, representing the single-largest capital investment in the company's history. At the peak of construction, the project is expected to create up to 2,500 jobs and approximately 160 permanent positions when operational

LyondellBasell has made the final investment decision to build the world’s largest PO/TBA plant at its Channelview Complex in Texas. The $2.4 billion project is the company’s single largest capital investment to date and upon completion will produce an anticipated 1 billion pounds of propylene oxide and 2.2 billion pounds of tertiary butyl alcohol annually.

"This world-scale project is a key part of our organic growth strategy which is designed to meet rising global demand for both urethanes and cleaner-burning oxyfuels while creating real, long-term value for our shareholders," said Bob Patel, CEO of LyondellBasell. "Our investment in this plant combines the best of both worlds: our leading PO/TBA process technology with proximity to low-cost feedstocks, which gives LyondellBasell a competitive advantage in the global marketplace for these products."

"We are pleased that LyondellBasell continues to view the Houston area as important to their global operations, creating jobs and opportunities for Houstonians," said Bob Harvey, president and CEO of the Greater Houston Partnership. "This new project further advances Houston's position as a global hub of petrochemical manufacturing, leveraging Houston's strategic access to the Americas and top markets around the world."

Once in operation, the plant will produce an anticipated 1 billion pounds (470,000 metric tons) of PO and 2.2 billion pounds (1 million metric tons) of TBA annually. PO is used in the manufacture of bedding, furniture, carpeting, coatings, building materials and adhesives, while the TBA will be converted to two ether-based oxyfuels, methyl tertiary butyl ether (MTBE) and ethyl tertiary butyl ether (ETBE). Both MTBE and ETBE are high-octane gasoline components that help gasoline burn cleaner and reduce emissions from automobiles.

LyondellBasell plans to sell the PO and derivative products to both domestic and global customers, while the oxyfuels will be primarily sold into Latin America and Asia. A portion of the TBA will remain in the domestic market in the form of high purity isobutylene which is used in tires and lubricants.

The PO/TBA project will have a split facility design to optimize product balances and realize synergies between LyondellBasell sites. The proposed location for the PO/TBA plant is the LyondellBasell Channelview Complex located in Channelview, Texas. The associated ethers unit, which will convert TBA to oxyfuels, is proposed for the company's Bayport Complex near Pasadena, Texas.

The company has completed front-end engineering design work and received the required environmental permits. Site preparation is underway and construction is expected to begin during the second half of 2018. It is anticipated the project will be completed by the middle of 2021. Final site selection is contingent upon final approval of certain economic incentives by the state of Texas.

The PO/TBA project is part of LyondellBasell's $5 billion organic growth program taking place on the U.S. Gulf Coast. LyondellBasell recently completed ethylene expansion projects at the company's La Porte, Channelview and Corpus Christi sites in Texas, finalizing a multi-year plan to increase annual ethylene capacity in the U.S. by 2 billion pounds (900,000 metric tons). Additionally, LyondellBasell began construction of a world-scale polyethylene (PE) plant at its La Porte Complex, which utilizes the company's proprietary Hyperzone PE technology and will more than double that site's PE capacity to 2 billion pounds (900,000 metric tons) per year upon completion in 2019.

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