Lanxess to start up 3 chemical plants this year
By Wang Ying (China Daily)
Updated: 2006-05-24 09:37
Lanxess AG, the spin-off company of German chemicals giant Bayer AG, will
begin operations at three chemical plants in China this year in deals that would
"significantly" drive its business in the regional market, its top official said
yesterday.
After recording a 50 per cent growth in China last year, the
Leverkusen-based company plans to start production at two new plants in Weifang
of East China's Shandong Province and Tongling of East China's Anhui Province
later this year, Axel Claus Heitmann, global CEO of Lanxess, told China
Daily.
It announced the start-up of its 20-million-euro (US$25.6 million)
plant in Wuxi, of East China's Jiangsu Province, at the end of April.
"I
expect the rapid growth to continue in Asia, especially in China," Heitmann
said, declining to estimate a year-on-year increase in sales for
2006.
Meanwhile, the company aims to save 200 million euros (US$256
million) in cost globally by 2008 to increase profitability, the top official
disclosed. That would be achieved through a slew of restructuring programmes
around its global portfolio, he added.
The company last year signed an
agreement with its Chinese partners to set up a joint venture in Tongling to
produce antioxidant Vulkanox, a material used to protect rubber compounds from
material fatigue.
The project, which will make Lanxess the first foreign
company to manufacture the chemical product in China, is expected to begin
production by the end of this year, Heitmann said yesterday. It is funded by
Lanxess, Tongling Xinda and Anhui Tongfeng two local firms in
Anhui.
Another chemical plant will commence production of hydrazine
hydrate at Weifang this summer, he said. Hydrazine hydrate is an intermediate
agent for chemicals.
The company has dismantled its former hydrazine
hydrate plant, one of the world's largest, in Baytown, Texas, and is
reassembling it in Weifang.
The relocation aims to take advantage of the
cheap energy and raw materials in Weifang such as sea salt, alkali and
urea according to Lanxess' local partner in Shandong, which takes the
minority 45 per cent stake in the venture.
On April 27, the German
chemical maker said its Wuxi engineering plastics plant began production with an
annual capacity to produce 20,000 tons of plastics, with plans to add another
production line in the near future.
Chemical consumption in China has
maintained a strong momentum in the past decade. The market, accounting for
about 7.5 per cent of global consumption, is now the second largest in Asia
after Japan.
But domestic manufacturing is too small to meet the demands
of the local market, providing room for joint ventures by foreign companies to
gain an edge over the competition, analysts have said.
Heitmann yesterday
said the company also has plans to seek merger and acquisition opportunities in
China to expand its market share, after completing rebuilding of its current
plants. But he refused to give a specific timetable.
Lanxess'
first-quarter profit rose 17 per cent as it raised prices and sold more
materials such as the rubber used in tyres and golf balls, and ingredients for
paint. Sales rose 6.2 per cent to 1.84 billion euros (US$2.4
billion).
The numbers show that the restructuring programme, which aims
to cut costs and increase profitability, has made good progress, industry
analysts said.
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