The resin market has been in difficult straits the last few years, as the price of key raw materials such as gum rosin have skyrocketed while supply remains uncertain. Meanwhile, there has been consolidation throughout the supply chain. As a result, pricing and supply of resin remains, in a word, volatile as resin manufacturers watch what is going on with great concern.
Founded in 2004 by John O’Mahoney, Arez International has grown to become a major player in the resin market, supplying in excess of 30,000 tons of resin annually from its two manufacturing facilities in the rosin-rich region of Guangdong Province of China. Still, the concerns over the stability of supply as well as volatile pricing have led Mr. O’Mahoney to take action.
“The resin industry is in a pretty sorry state, making it increasingly difficult for resin producers to offer the customer the quality of product combined with the pricing stability he requires to operate competitively in his environment.” Mr. O’Mahoney said. “There are great challenges facing us and a continuation of the status quo is simply no longer an option. Challenges such as the unprecedented increases and ever worsening volatility in the price of gum rosin shows little sign of abating and may be set to get even worse.”
To Mr. O’Mahoney’s way of thinking, we need innovative ideas to extricate ourselves from this cycle. There are many avenues to explore; many have already proven interesting but have not resolved the problems,. Arez believes there are at least two options worth taking further: To become more cost efficient as a company striving to eliminate all non-value creating costs from the sector. Much progress has been made in this area by many companies in recent years but more can and must be done. The second, and possibly more important, is to find alternatives, to develop new chemistry, and Arez has believed and invested in this concept from its inception. This investment is set to bear fruit.
By setting up Arez International, Mr. O’Mahoney and his colleagues have already developed a cost-effective approach to producing resin from its Chinese base.
“We produce in excess of 3,000 tons of resin each month, and we are adding two more plants,” Mr. O’Mahoney said. “The first, which is located next to our facilities in China, will be coming online by the end of 2010, with production starting January 1.”
The new Guangdong plant will be rolling out a new technology that reduces the need for rosin when compared with traditional resins. It is also our intention to continue to develop thus concept with further reductions likely in the not too distant future.
“At our new Chinese facility, we will produce polymers for the ink industry that use 50 percent less rosin that traditional ink resins, which will significantly reduce the dependence on rosin as the main raw material in ink resins,” Mr. O’Mahoney said. “This is potentially an industry-changing event. We have already supplied lab samples to a number of ink manufacturers and have received excellent initial results.”
Adding its first North American plant is also a significant move for the company.
“Our new U.S.-based plant will be built on a six-acre plot in Crossett AR,” Mr. O’Mahoney said. “A domestic U.S. plant allows us to support our growing domestic business and to compete on a more equal footing in the North American market.”
Mr. O’Mahoney said that Arez will complete the new plant in Guangdong before year-end and immediately commence work on the new Arkansas facility. Arez International anticipates adding 20 million pounds capacity annually at each plant.
Mr. O’Mahoney summarized, “increasing our capacity is interesting but the greater source of satisfaction is the potential of the new technology.
“In discussions to date this technology has understandably drawn great interest from customers and many are very enthusiastic, and are fast tracking the approval process,” Mr. O’Mahoney concluded. “We believe that our new products will bring resin prices to a more reasonable and sustainable level.”