LG Chem Ltd., chemical and battery making unit under South Korean conglomerate LG Group, said on Monday that it will expand the output of acrylonitrile butadiene styrene (ABS), a lightweight plastic material widely used in information technology (IT) and vehicle products.

According to the company, it will invest $100 million to double annual production capacity of ABS plastic at its manufacturing facility in Huizhou, a city in southeast Guangdong Province, China, from the current 150,000 tons to 300,000 tons. The facility is jointly owned by the Korean chemical company and China National Offshore Oil Corporation (CNOOC) based on a 50:50 partnership investment. The latest facility expansion will be invested only by LG Chem, allowing its share ownership to reach 70 percent that guarantees independent management. The company will aim to complete construction by the end of next year.

LG Chem said that the latest facility expansion in China, along with processing improvements at other facilities in Korea and China, will allow the company to up its total annual ABS output to world’s largest volume at 2 million tons. The overall output expansion will also increase its market share from the current 21 percent to 26 percent.

ABS, which is widely used in IT and auto products as well as household appliances, is a special plastic material that is more immune to external shock and heat compared to general plastic. Only few manufacturers with high technical skills are capable of producing ABS, which is why operating profit rate is maintained high at 10 percent.

Currently, Taiwan’s Chi Mei Corporation ranks top in terms of production volume with 1.85 million tons per year, followed by LG Chem, Germany’s INEOS Styrolution with 1.19 million tons, and Taiwan’s Formosa Plastic Corp. with 860,000 tons.

Total demand for ABS plastic in China that accounts for half of world’s total demand has been expanding 4 percent every year. Analysts forecast the size of China’s ABS market will reach 4 million tons this year.

Son Ok-dong, president of LG Chem’s basic materials business, said that the facility that will undergo expansion will be used as a forward base to tap into other emerging Southeast Asian markets and also further target China’s largest south market.

In addition to the latest output expansion, LG Chem also plans to improve processing of its Yongxing facility in Ningbo, a city in northeast Zhejiang province near Shanghai, with an aim to raise output from the current 760,000 tons to 800,000 tons. The Yongxing facility was set up based on a joint venture between LG Chem with 75 percent stake ownership and China’s Yongxing Group. The facility is responsible for material demand in China’s northeastern area while the ABS facility in Huizhou, southwestern area.

By Chung Wook

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