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August 8, 2009

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Home » Business » Energy

Capacity boost eyed on tire prospects

Jiangsu Sinorgchem Technology Co, a major maker of chemicals used in rubber products, is raising capacity in anticipation the tire market will return to normalcy in the second half of next year.

The company, partly owned by United States private equity firm Carlyle, supplies para-phenylenediames (PPD), a key rubber chemical additive which can prevent premature ageing of rubber, to tire makers such as Michelin, Pirelli and Yokohama.

"The economic crisis is not yet over, but we expect the market to bottom out by year-end," Sinorgchem's Chief Financial Officer Stephen Choi said yesterday. "It could start to improve in the first half of 2010 and return to normal in the second half."

Sinorgchem last month began a 1.8-billion-yuan (US$264 million) expansion of its plant in Heze, Shandong Province. The first phase, which includes a 40,000-ton-a-year PPD facility, costs 1 billion yuan and is set to come on stream in April next year.

Choi said Sinorgchem's vision is to become the world's top brand in the rubber chemical additive market. It competes with Flexsys, a unit of US specialty chemicals maker Solutia Inc.

Choi declined to give sales figure for the company but said sales grew 10 to 15 percent in the first half from a year earlier as it expands its global market share. Sinorgchem exports half its products.

Jiangsu Province-based Sinorgchem yesterday opened an operation center in Pudong New Area.

Global auto sales have slumped due to the recession but China posted strong growth in the first half of this year, thanks to government stimulus measures.


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