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Why owning a resin plant
The price of the resin includes the profit margin of the resin producer, as it happens in all markets. By producing own resin, this margin can be used from now on for own benefit and can be channeled in other needs of the production. Additional markups for specialty resins (high melamine content, impregnation syrups, etc.) are also omitted.
The production of resin for very low formaldehyde emission classified boards requires addition of town water due to negative water balance in the resin plant. This town water has an additional transfer cost for the board producer, a cost that can be eliminated through transportation via pipelines from own resin plant in the existing board plant.
Furthermore, approximately 12% of the final resin’s weight consists of atmospheric oxygen, which is globally available. When purchasing resin from third party, transportation cost for this quantity has to be compensated. By owning resin plant this cost is removed.
Last but not least the board producer is capable of organizing without intermediaries his resin transports 24/7 without paying additional costs for after midnight transports.
- Methanol and urea are commodities so prices will be negotiated directly with the suppliers, giving stronger leverage for achieving better prices due to high volumes
- Rail transport is feasible (TRT cost is less vs. truck) as larger quantities will be shipped
The financial benefit of minimizing the required stock levels and stock keeping costs can be enjoyed by the vertically intergraded Board Producer. The two storage facilities that are used in the production (resin producer tanks + board producer tanks) now function as one and resin goes direct to the board production.
A repetitive issue between the cooperation of resin and board producers is occasional doubts on the quality of the delivered resin and the resin performance during board production. By manufacturing the resin in own facilities, this issue is eliminated. The board producer has full control of production equipment and procedure that reassures consistent and known quality. Having the advantage of own manufactured resin under absolute control of the whole process, the chance of a mistake that may delay the production is limited and, above all, is known in advance thus achieving demystification of resin chemistry.
Production scheduling and absence of flexibility in the production can be a serious and persistent issue for all kind of plants. By operating own Resin plant this kind of issues are extensively suppressed. The Board producer will be the sole responsible for his production scheduling without having to worry about possible delays in deliveries’ time. The resin production will take place just when needed with only the necessary staff required and in all hours and days of the year, depending on business needs. This flexibility gives the opportunity to the production to gain more of its independence. The Board Producer can receive “24/7” deliveries and arrange drop-offs to own schedule without constraints from third parties.
Through own resin production, a Board producer will be able to extend its clientele even to competition. Since the Board producer will be able to produce a competitive range of resins at an adequate price, the option of cooperation with other board producers becomes widely opened.
When a board manufacturer produces resin without own formaldehyde production, they are forced to purchase a formaldehyde source. This adds costs as:
- If UFC is brought in, then town water has to be added. At own plant, the utilization of the chemically produced water (Distillate) is common practice.
- If formalin is used as formaldehyde source, then the resin producer has to bear the transportation cost of the extra water. Further down the resin production process, that water will have to be evaporated and discarded, contributing to poor cost management.