2011-02-26 10:00

SHANGHAI - Royal DSM NV, the global life sciences and materials sciences company, will launch a 500 million yuan ($76 million) project in Nanjing, Jiangsu province to build a new production facility for composite resins targeted at the Chinese market.

The facility, scheduled to be operational in June 2012, will produce 100,000 tons of composite resins annually. It will be a joint venture, with 75 percent shares owned by DSM and 25 percent by Sinopec Assets Management Co Ltd, said Michael Effing, president of DSM Composite Resins, on Friday.

"The facility will substantially strengthen DSM's position in the Chinese composite materials market," said Effing.

He added that the expansion will follow on from the continued strong demand for high-end resins in all the application segments in the region.

This investment fits in with DSM's strategy in China where the company is expected to invest $1 billion during the next five years.

Effing said DSM Composite Resins has mapped out a five-year expansion plan for its Chinese operations, including a plant in the north of the country and possibly also one in the west.

"For several years demand for composite resins in China has outstripped production capacity," said Nico Gerardu, a member of the DSM Management Board and is responsible for the performance materials cluster.

Composite resins can produce ecological benefits by reducing energy use, emissions and waste throughout the value-chain of end-markets such as transportation, wind energy and construction.

As the leading market for composites, China consumed 1.7 million tons in 2010, while Europe used 521,000 tons and the United States only 453,000 tons, indicating a decreasing tendency, Effing said.

"China's growing demand for composite resins will increase as users of automobiles and wind energy increase," said Henry Tang, business director of DSM Composite Resins Asia.

The country is expected to manufacture 20 million cars in 2015, up 53.84 percent from 2010.

Truck output will probably rise from 70,000 in 2010 to 1.5 million in 2015.

"With this large investment in the local manufacturing capacity, DSM is preparing itself to grow in China's composite resins market to meet fast-growing needs," said Gerardu.

He said the investment will also contribute to DSM's aim target of doubling its 2010 sales in China to over $3 billion by 2015, of which sales of composite resins are expected to reach 200 million euro ($276 million).

Effing said 90 percent of composite resins from the new facility will be sold locally, while the rest will be exported to other Asian countries.

Local chemical industry insiders said with this new facility, in conjunction with a new composite materials research and development center (R&D) in Shanghai, DSM is looking forward to a bright future for its composite resins business in China.

Effing said DSM has invested 10 million euros in the R&D center to provide sustainable and innovative solutions to drive its expansion in China.