Abu Dhabi-based polyolefins supplier Borouge Pte. Ltd. is forging ahead with its investment in China and the Middle East to support fast growth in the Chinese market, in spite of the global economic downturn and market fluctuation.
Demand in China has picked up in the last couple of months, and government stimulus packages are turning out good results here, said CEO William Yau in an interview at Chinaplas, held May 18-21 in Guangzhou.
A joint venture between Vienna's Borealis AG and Abu Dhabi National Oil Co. in the United Arab Emirates, Borouge has participated in China's government projects, such as water-supply systems in the post-quake Sichuan region.
Of course, we want to do more, said Yau said, who joined the company in November 2008 and is now based in Singapore.
People seem to be quite optimistic in China, which is very important, he said. He added that Borouge's target markets, such as infrastructure, automotive and other higher-value applications, enjoy more stability than the market average.
Borouge is currently building a compounding facility in the Fengxian district of Shanghai. The plant is expected to go on stream in mid-2010 with initial compounding capacity of 110 million pounds of polypropylene annually. With a clear focus on the auto industry, the unit has potential to ramp up to 176 million pounds.
If the demand is strong, which is likely to be the case, we've reserved additional land and can expand further, Yau said.
He believes the firm's business in China will grow much faster than the rest of the world partly because we are speeding up our investment here, and partly because the demand is pretty strong here, he said.
To get closer to customers and serve the market better, Borouge is setting up logistics hubs in the region. Yau said the Shanghai logistics center will be able to handle 1.3 billion pounds of materials annually, the Guangzhou hub 550 million pounds, and the Singapore center 728 million pounds, once they become operational next year.
These logistics centers will be equipped with packaging lines that can, depending on customer needs, pack pellets from containers into bags and deliver to customers around the area.
Borouge outsources the construction and operations of the logistics hubs, Yau said. The contract value will be $200 million during the next 10 years for the Shanghai hub, and more than $100 million for the Guangzhou hub.
The company's investment in production also is proceeding in the Middle East. Phase two of Borouge's polyolefins project in Abu Dhabi will be completed next year, bringing current capacity of 1.3 billion pounds of polyolefins up to 4.4 billion pounds. That volume will increase to 9.9 billion pounds by year-end 2013 when a third capacity expansion comes on stream.
With offices in Hong Kong, Beijing and Shanghai, Borouge plans to set up an office in Guangzhou.
Yau said the firm also operates a sales center in Mumbai, and he doesn't rule out a possible logistics center in India in the future.
At Chinaplas, Borouge also inaugurated an undergraduate scholarship program with the South China University of Technology in Guangzhou and the East China University of Science and Technology in Shanghai.