Showa Denko (SDK) (Tokyo: 4004) has decided to terminate production and sale of biodegradable polyester resin BionolleTM, which is used as material for various products including shopping bags and agricultural mulch film. SDK will terminate production of BionolleTM by the end of December 2016, and sale of it by the end of December 2017.
SDK has already included a reserve to cover extraordinary loss expected to be accrued by the termination of production and sale of BionolleTM in its financial results of the third quarter, 2016. The effect of the posting of this reserve on financial results was insignificant. All employees currently engaged in our biodegradable plastic business are to be reassigned to positions in other businesses.
SDK pioneered biodegradable plastic in Japan, and started to sell it in 1993. Recently, SDK has striven to cultivate market for compound products to form shopping bags, in response to the tightening of environmental regulations in Europe and China on shopping bags made from conventional plastics. This time, however, SDK concluded that it is difficult for the Company to continue production and sale of biodegradable plastic, since there has been no sign of improvement in the harsh market environment for biodegradable plastics business because of the delay in permeation of environmental regulations on plastic shopping bags and a fall in market prices of biodegradable plastics.
In its ongoing medium-term business plan “Project 2020+,” SDK classifies its functional chemicals business into “Growth-accelerating” business, and has been accelerating the expansion of this business by promoting functional chemicals to be applied to infrastructure, automotive parts and electronic devices not only in the domestic market but also in the Chinese and ASEAN markets. SDK will expand sales of high-value-added individualized products in the rapidly growing Chinese and ASEAN markets, aiming to strengthen earning power of its functional chemicals business.