After only three years of operations at its Shanghai plant, BASF SE's engineering plastics division has announced plans for a large-scale expansion.
During the next four years, the company plans to more than double its compounding capacity in nylon and polybutylene terephthalate, creating the largest plant of its kind within BASF's global network.
The expansion, which will add 143 million pounds of additional annual capacity, is vote of confidence in the increasing sophistication and environmental consciousness of China's industry.
[China's engineering plastics market] offers significant growth opportunities and we have taken the necessary strategic actions in order to expand our market position, said Hermann Althoff, senior vice president of BASF's Asia-Pacific engineering plastics unit, in a Jan. 12 briefing in Shanghai.
While BASF declined to give a specific number, investment in the expansion is said to be in the double-digit-million-euro range.
Since it opened its doors in 2007, the BASF plant has focused entirely on nylon and PBT products. Last year, Asian consumption of nylon and PBT compounds was more than 2 billion pounds and China accounted for 50 percent of that demand. Over the next five years, demand in Asia is expected to increase by 8 percent every year.
This growing demand is driven greatly by the automotive and electronics industries, Althoff said, with more automakers looking to lighten their cars by replacing metal with high- performance plastics.
Chinese manufacturers typically use less than 5 kilograms [11 pounds] of engineering plastics per vehicle, Althoff said. In Germany, automakers use 25 kilograms [55 pounds] per vehicle.
That leaves a lot of room for growth, he said.
We are targeting all parts of the car, Althoff said, listing applications ranging from oil pans to seat structures.
Opportunities are also developing in China's market for electric cars, Althoff said.
In the electronics industry, BASF has recently introduced a PBT product, Ultradur LUX, capable of being laser-welded. The company also is seeing an increase in sales of its Ultradur high-speed nylon, which it said flows quickly, enabling manufacturers to mold more parts in a given time period.
The capacity expansion at the Shanghai plant is expected to be completed in two phases.
In the next two years, the company will add three compounding lines, increasing the capacity of the plant from 99 million pounds per year to 185 million pounds per year.
From 2013-15, another 57 million pounds per year will be added, bringing the plant's total to 242 million pounds per year.
BASF's capacity in Asia, which includes plants in Malaysia, South Korea, Japan and India, will reach 485 million pounds per year.
The great majority of the expansion will be used to serve China's domestic market. According to Althoff, 80 percent of the output will be sold in China.
The expanded supply will help BASF ensure a stable supply at short lead times close to the point of consumption, Althoff said.