Nanjing Hydrocarbon Resin Plant, China

The Nanjing project runs parallel to the Chinese government's on-going five year plan to augment the country's capabilities in the speciality and fine chemicals sector, and to encourage investments that add value to C5 distillate by-products.

Furthermore, in September 1998, the government brought about a set of rules to try and strengthen the economy. These include:

• Tougher measures on illegal imports and the control of capital flight
• Overseas holdings in US dollars must be brought back to China by 1 October 1998
• Local banks will no longer be able to offer loans in RMB Yuan to foreign companies
• Illegal imports using forged documents are to be investigated
• The State Administration of Foreign Exchange will now have to grant approval to importers.

The capacity of the plant when it is fully operational is currently over 18,000t/yr. The new facility is attempting to meet the growing need that China faces for high-quality hydrocarbon tackifying resin for the adhesives market, which previously was only manufactured at Eastman's site in Longview, Texas. Furthermore, the facility promotes the development of a series of new products that can benefit China economically and socially.

EASTOTAC HYDROCARBON TACKIFYING RESIN

The owner of the new plant is Nanjing Yangzi Eastman Chemical Ltd. This is a 50/50 joint venture between Yangzi Petrochemical Industrial Corporation and Eastman Chemical Ltd. Construction of the facility in Nanjing, Jiangsu Province, started in July 1999 at a cost of $29.5 million. When fully operational, the plant will produce Eastotac hydrocarbon tackifying resin for adhesive manufacturers. Eastman will provide technology and marketing expertise and will sell the resins outside China.

The plant began commercial production in December 2000, and is the first of its kind in China to use proprietary Eastman technology to produce hydrocarbon resin. The facility uses C5 distillate, a by-product from the manufacture of ethylene, to produce the Eastotac which is used by several manufacturers to produce hot-melt adhesives for infant and feminine hygiene products, packaging, glue stick, tapes, labels and other adhesive applications.

The Nanjing plant is strategically located in the Dachang district in Jiangsu province to ease global supply. The plant will supply not only the domestic and regional markets, but also to European, Latin American, Asia Pacific and the Middle Eastern markets. Hydrocarbon tackifier resin is already produced in China, although in small quantities because hitherto its dark colour and low softening point have limited its usage.

EASTMAN-YANGZI PARTNERSHIP

Yangzi Petrochemical Industrial Corporation brings a sufficient and reliable raw material supply of C5 distillate to the joint venture, while Eastman provides the special technology for producing hydrocarbon resin. Both partners also bring sales and marketing expertise in their respective markets.

Eastman Chemical Ltd. is a subsidiary of USA-based Eastman Chemical Company, and this project is Eastman's first venture in the People's Republic of China. Eastman manufactures and markets plastics, chemicals and fibres. The company's presence in the coatings, inks, resins and adhesives global market is now worth about $1 billion per year. In 1998, its sales in the Asia-Pacific region stood at $429 million, which accounts for approximately 10% of total revenue.

Yangzi Petrochemical Industrial Corporation is an affiliate of Yangzi Petrochemical Corporation (YPC), one of the largest petrochemical companies in China. The company produces chemical and fibre intermediates and plastic. YPC has an ethylene manufacturing plant with a capacity of 400,000t/yr, as well as an aromatic hydrocarbon manufacturing facility with a capacity of 850,000t/yr. The company also produces 650,000t/yr of terephthalic acid (TPA), as well as plastics, fibre intermediates and chemical products. It has a registered capital of $13.5m, and an investment of $40m.