M'bishi Chemical to cut production cost of polyester feedstock

TOKYO (Nikkei) -- Mitsubishi Chemical Corp. is taking steps at its factories worldwide to help slash 20% off its overall costs for manufacturing purified terephthalic acid (PTA), a main ingredient for synthetic fibers.

The Mitsubishi Chemical Holdings Corp. (4188) unit is the world's second-largest producer of PTA and the leading manufacturer in Asia. To remain competitive, it ceased domestic production in December 2010, but retains a global capacity of 4.21 million tons a year with factories in South Korea, China, Indonesia and India.

The bottom dropped out of the PTA market last fall as Chinese spinners held off purchases because of tighter monetary policy at home and decreased sales in Europe. In the Asian markets, PTA now sells for around 1,150 dollars to 1,200 dollars a ton, down from 1,500 dollars last March. Over the past 12 months, Mitsubishi Chemical has watched its profit margins for PTA fall by half.

To stabilize profits in this business and hone its competitiveness, Mitsubishi Chemical will invest a total of nearly 5 billion yen to upgrade factories, aiming to reduce its per-ton PTA manufacturing costs by 20-30 dollars.

At the PTA plant in India, it will cut energy costs by building an on-site coal-fired power plant. In addition, the company will improve piping to resolve the problems that have limited the new line there to only 65% of its full capacity of 800,000 tons a year.

At the Indonesian facility, the firm will shut down an on-site power plant that burns expensive heavy oil and natural gas, and instead procure power from a state-owned utility beginning next year.

At a factory in China, Mitsubishi Chemical will install a water treatment system that will enable 60% of the industrial wastewater to be reused. Local restrictions on water use have threatened to limit the plant's operating rate.

(The Nikkei Business Daily Jan. 18 edition)

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