Undaunted by the effects of the Asian flu, world polypropylene giant Montell Polyolefins is expanding its presence in that region through a PP joint venture with two Japanese firms.
The new company will be half owned by Montell of Hoofddorp, the Netherlands, and half owned by Showa Denko KK and Nippon Petrochemicals Co. Ltd., both of Tokyo. It will rank as Japan's sixth-largest PP maker with annual capacity of about 620 million pounds.
The unnamed firm will operate three PP production lines in Oita and one in Kawasaki, Japan. Annual sales are projected at about $260 million.
At an Oct. 29 news conference in Tokyo, Peter Vogtlander, Montell president and chief executive officer, admitted that industry observers ``may be startled by the bold optimism'' that global PP production leader Montell is showing at a time when economies throughout Asia continue to suffer from 1997's financial meltdown.
Japanese polyolefin demand is down 10 percent in 1998 and margins are poor, partly because of increased competition from other regional producers.
``There is a well-known proverb that goes, `May you live in interesting times,''' Vogtlander said. ``However, we are convinced that interesting times also offer moments of great opportunity. But you must be prepared to take bold and strong actions.''
The three companies have worked together since 1996 when they formed Montell-JPO Co. Ltd., a joint venture created to develop markets in Japan for Montell materials such as its Catalloy engineering resin and high-melt-strength PP.
Vogtlander added in a news release that the formation of the new company is ``a logical extension of the rationale for creating both Montell and JPO.''
The joint venture also markets natural and compounded PP to the automotive market.
JPO Co. Ltd., also known as Japan Polyolefins Ltd., was formed by Showa Denko and Nippon in 1995.
The new venture will include JPO's PP business. The deal combines JPO's PP production with Montell's technology and global marketing.
``The production will be primarily for the domestic market, but the new company will benefit from Montell's ability to export to other markets as well,'' a Montell spokesman said.
The spokesman added possible expansions could include installing world-scale, 300 million-pound-per-year production lines at both the Oita and Kawasaki sites.
Worldwide, Montell produces about 7 billion pounds of PP annually, including 3 billion pounds in North America.