May 26 2005
LG Chem, Ltd. has announced that it would hold a groundbreaking ceremony for its VCM/EDC plant in Tianjin, China. At the end of last year, LG Chem signed an agreement with Tianjin Bohai Chemical Co., Ltd. to establish a VCM (Vinly Chloride Monomer) and EDC (Ethylene Di-Chloride) plant by the end of 2006.
Nearly all of VCM goes into PVC (Poly Vinyl Chloride), which is used for manufacturing many plastic products in the building and construction sector. EDC is the base chemical of which 95% is used for producing VCM.
With a total investment of USD 300 million, the new facilities strategically located at Lingang Industrial District, Tianjin, China will have capacity of 350,000mt/yr of VCM, 300,000mt/yr of EDC and 240,000mt/yr of Caustic Soda.
The new facilities will be established as a joint venture named 'Tianjin LG Bohai Chemical Co., Ltd.'; the investors are comprised of LG Chem (45%), LG Petrochemical (20%), LG International (10%), LG Dagu (10%), and Tianjin Bohai Chemical Industry Co., Ltd. (15%).
"The establishment of an VCM and EDC facility in China is part of LG Chem's strategy of vertical integration, which should deliver synergy effects to our PVC business in China. Moreover, Tianjin was the perfect match for the establishment," said Churl Ho Yoo, the president of the Chemicals and Polymers Company.
Tianjin was selected as the most suitable location for the company's new VCM and EDC facilities due to its stable supply of electricity and salt, essential elements in producing EDC, and for its proximity to LG Dagu, the company's PVC facility in China. LG Dagu has an annual capacity of 340,000mt/yr and the distance of the new VCM and EDC plant from LG Dagu will only be 10km.
"With the cost savings derived from the enhanced self-sufficiency of raw materials of PVC, we will be able to solidify our foothold in the PVC business in the region," the president added. The strong PVC demand in China, which has been increasing by approximately 10% since 2003, is expected to continue until 2008 amid tight supply.
Overall, the annual PVC demand in China is estimated to be 6,850,000mt while supply is only at 5,190,000mt.
http://www.lgchem.com