German chemicals company Hoechst AG intends to enter the Asian polypropylene packaging market with a joint venture to build a $100 million biaxially oriented PP film plant in Thailand.
In addition, Hoechst expects to form six to 10 new joint ventures in China this year and more than 17 others by 2000 when it plans to have invested more than $1 billion there, said Jurgen Bauerle, chairman of Hoechst's China investment holding company.
A Hoechst spokeswoman confirmed that those ventures are likely to include some plastics- related businesses.
Hoechst has announced its unit Hoechst Trespaphan GmbH of Neunkirchen, Germany, has signed a letter of intent with Bangkok, Thailand-based Thai Petrochemicals Industry Group pcl to establish the joint film plant, which will have annual capacity of 110.2 million pounds.
Hoechst Trespaphan, which already has global BOPP film capacity of 319.7 million pounds per year and production in Germany, France, Britain, Mexico and South Africa, will take a 51 percent share. TPI Group will hold the remainder.
The plant will be built in two phases, with the first line capable of turning out 55.1 million pounds a year. The second phase will add a second line to double initial capacity. Hoechst was unable to give a firm start-up date but it could be in late 1998, with phase two operational a year later.
Hoechst expects to conclude the deal by mid-1997, according to Trespaphan Asia project manager Klaus Schnupp. Output of standard and specialty film for cigarette packaging and opaque grades will be aimed at the Thai market and other Asian countries, he said.
Thailand, Malaysia, Indonesia, Singapore, the Philippines and Vietnam constitute a market of about 286.6 million pounds per year that is growing about 10 percent annually, Schnupp said. The Thai market holds an estimated 40 percent share of that market, Schnupp said by telephone from Neunkirchen.
Schnupp confirmed that his firm, a leading global PP film player, has no Asian PP presence. Thailand's central location among the Asian nations and its attractiveness to investors make it a ``very interesting place to be,'' he said.
There is a big opportunity for Hoechst in Asia, he said, because of its fragmented nature with numerous small players but none with global interests.
The Thai facility is likely to be located in Rayong, Thailand.
TPI Group, which consists of 15 separate companies, is one of Thailand's biggest petrochemical firms, producing a range of resins, including PP, high and low density polyethylene and ABS, according to Hoechst.
It aims to diversify downstream beyond its existing molding operations, such as subsidiary TPI Polene pcl, a joint venture with a Japanese firm, which makes polymethyl methacrylate optical lenses, according to Hoechst.
Meanwhile, Hoechst confirmed that in China it already operates 18 joint ventures with Chinese companies and has invested $450 million there so far.