Sumitomo Chemical plans PP compound expansion in North America and Europe

09-Aug-07

Sumitomo Chemical plans to expand polypropylene (PP) compound business in both North America and Europe. Sumitomo plans to set up new manufacturing and marketing operations in the two continents as part of its global strategy to develop its polypropylene business - its core petrochemical interest. In North America, Sumitomo Chemical has for many years operated its business in PP and PP compounds through Phillips Sumika Polypropylene Company, a joint venture with Chevron Phillips Chemical Co. LLC, and is also expanding its sales volume of PP compounds through toll manufacture. Under the current plan, a new joint venture will be established between Sumitomo Chemical and the Toyo Ink Group, and the new company will construct a new PP compound plant to further expand the business in North America with higher quality and more cost-competitive products. Sumitomo Chemical's PP and PP compounds business operations in Europe, has been rather limited until now. Sumitomo Chemical has entered into an agreement together with the Itochu Group and Toyo Ink Group to acquire the PP compound operations run by Asahi Kasei Chemicals and Planesa S.A. in the UK and France. The businesses targeted by this acquisition serve a broad spectrum of the automotive and home appliance industries in Europe. Leveraging its global PP supply capabilities and advanced technologies accumulated over many years, Sumitomo Chemical seeks to actively strengthen this existing business as well as both further the development of its compounds business and increase the value-added of its products. This expansion will enable Sumitomo Chemical to enhance its global PP compound supply capabilities to meet the needs of its customers as they expand their businesses worldwide. The Company will continue actively to expand, strengthen and add value to its business in PP and PP compounds. The company has 4 production facilities with an annual capacity of 2 million tons of PP. The four facilities are located at Chiba in Japan; Singapore; Texas in USA; and Rabigh in Saudi Arabia (scheduled to come on-stream in H2-08). This expansion will aid the company to consolidate its position as a global player in the world's major markets for PP compounds. These global PP supply capabilities give Sumitomo Chemical distinct advantages in strategic development of downstream PP compounds, including outstanding capabilities in product design, cost competitiveness and stable supply.