TOKYO (Aug. 18, 3:55 p.m. ET) — Signaling plans to target the automotive business in North China, Japan's Sumitomo Chemical Co. Ltd. said Aug. 18 that it is building a polypropylene compounding plant in Changchun, in a joint venture with local firm Jilin Xindongtai Engineering Plastics Co. Ltd.
The factory is Tokyo-based Sumitomo's second investment recently aimed at North China's car industry — in May it announced another PP compounding plant, in Dalian, Liaoning province.
“Chinese automakers have rapidly been increasing their presence in their local market over the recent years, and serving these customers will be a key to success for Sumitomo Chemical to accelerate future business expansion,” the company said in a statement.
The Changchun, Jilin province, factory will be a 50/50 joint venture between Sumitomo and Xindongtai, with annual production capacity of 20,000 metric tons. The companies said the new factory will start operating in January.
Xindongtai, based in the automotive industry development zone of Jilin Province, supplies PP and other plastic compounds chiefly to state-owned Chinese automaker First Automobile Works Group Corp., Sumitomo said.
FAW is based in Changchun, and is one of China's largest automakers. It has joint ventures with Volkswagen, Toyota and Mazda.
The Changchun investment comes just three months after Sumitomo said it was building its Dalian compounding plant, with a 10,000 metric ton per year capacity.
That facility will be a 50/50 joint venture between Sumitomo Chemical and its existing subsidiary in Zhuhai, Guangdong province, called Zhuhai Sumika Polymer Compounds Ltd.
Sumika is itself a joint venture between Sumitomo Chemical and Toyo Ink SC Holdings.
Sumitomo said the Dalian plant would meet rapidly growing demand for PP compounds in North China, including in the automotive industry.
It said major automobile manufacturers have plans to establish operations there, and it said the Dalian facility would also service customers in the nearby cities of Shenyang, Liaoning province and Tianjin.
Sumitomo said demand for PP compounds is “booming” in China, with the 22,000 metric ton capacity Zhuhai facility “maintaining full capacity.”
The company set up the Zhuhai factory, in South China, in 2005, and doubled its capacity in 2008.