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January 26, 2016 01:00 AM

Pret boosting global compounding capacity

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    Shanghai Pret Composites Co. Ltd.
    Shanghai Pret's headquarters.

    While adding compounding capacity in the United States, Shanghai Pret Composites Co. Ltd. also is pushing forward with a major expansion that will nearly double its capacity in China.

    The material supplier last week unveiled the project, a 494 million yuan ($75 million) investment in Zhejiang that will create 150,000 metric tons (331 million pounds) of annual capacity. Pret currently has a total of 180,000 tons of capacity between its production facilities in Shanghai, Zhejiang and Chongqing.

    The new project will continue Pret's automotive market focus with polypropylene, ABS and polycarbonate/ABS compounds.

    A detailed feasibility study shows that the investment breaks down to 262 million yuan for the building, 130 million yuan for equipment and 50 million yuan for land, among other expenses.

    Pret plans to kick off construction in 2016 and start production on March 31, 2018. The facility will ramp up capacity in stages, with 30 percent of designed capacity in 2018, 60 percent in 2019, 80 percent in 2020 and reaching full capacity in 2021.

    When fully launched, the plant is expected to produce 100,000 tons of PP compounds, 30,000 tons of ABS, and 20,000 tons of PC/ABS per year.

    The company noted that the new capacity will mostly serve the domestic market.

    Pret expects the project to generate an average of 2 billion yuan of sales ($303.7 million) in the first 10 years, netting 137 million yuan of profit per year. Overall, the project touts a total return on investment of 27.7 percent and an internal rate of return at 17.5 percent.

    The publicly listed company also plans to add more capacity at its new Chongqing production base.

    In the United States, Pret had said it plans to install a 22 million pound-per-year thermoplastic polyolefin line at its Johnsonville, S.C., plant by the end of 2015 and to add a second similar line in early 2016, aimed at North American automakers and their suppliers. The operation is under its newly named Wellman Advanced Materials business.

    Pret has also been hunting for acquisition targets in Europe but it has not yet announced any deal.

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