Tianjin PVC Plant, China

The project is a new PVC plant in Tianjin in China. The plant is being managed by Tianjin LG-Dagu Chemical Company, a joint venture between LG Chemical, the Korean chemicals and plastics manufacturer and local Chinese partners.

THREE-STAGE PVC PLANT EXPANSION

The Tianjin plant has expanded in three main stages. The first stage ended in 1998, when the 100,000t/yr plant was first opened. In 1998, the Korean company announced that it wished to increase capacity to 150,000t/yr of PVC. This stage was completed in the last quarter of 1999. The third stage will reach completion in 2002. At that time the plant will have a total PVC capacity of 300,000-350,000t/yr, if the company's plans are fulfilled. This expansion is likely to lead to LG Chemical continuing to maintain its position as the leading PVC producer in China. At the end of these expansions, LG Chemical would expect to have a corporate PVC production capacity of 900,000t/yr.

The cost of the first stage was estimated at $86 million, and the cost of the second stage estimated at $70 million. The third stage is as yet uncosted, since the project has not been finalised.

The new plant is part of LG Chemical's expansion strategy in China. The investment at Tianjin was announced simultaneously with investment in a LG Chemicals' ABS resin plant at Ningbo. This is because LG Chemical is aware of the great potential in China, and regards local manufacturing sites as essential targets if the company is to exploit the market, partly because it is so difficult to import into China.

The sheer scale of LG Chemical's enterprise will give it an advantage over most of its local Chinese rivals. Whilst China has more than eighty PVC producers, their average production capacity is not more than 30,000t/yr. LG Chemical's plant dwarfs them, even before its third stage expansion. The company's economies of scale, together with its locally produced feedstock from a number of related plants planned by the Korean manufacturer can be expected to give it tremendous competitive advantage.

DIOCTYL TEREPHTHALATE PLANT PLANNED

LG Chemical also plans to eventually build a 30,000t/yr dioctyl terephthalate unit in Tianjin to support the PVC unit through a joint venture dubbed LG Bohai (Tianjin) Chemical Company. It has also expressed interest in building a VCM plant in the same town, to act as a purveyor of feedstock to the rapidly expanding PVC plant. Finally, the company floated a scheme for a naphtha cracker at the same site in a joint venture with Dow Chemical, but this would not open until 2004.

LG Chemical is also interested in building polystyrene (PS) and expandable polystyrene (EPS) producing facilities in Zhe Jiang and Jiang Su Provinces, the most economically active districts in China. In total, the Korean company now has eight manufacturing sites in China. These include a number of plants for plastics and the raw materials used to manufacture them.