Mitsubishi Chemical to offload PTA units in China, India

29 Jul '16

2 min read

Japanese petrochemicals major Mitsubishi Chemical Holdings has decided to sell off its Chinese and Indian operations that make a polyester feedstock in light of a persistent glut of the acid, the Nikkei Asian Review has reported.

The Japanese company once held the world's second-largest market share in purified terephthalic acid, or PTA. But with Chinese manufacturers increasing output since 2012, resulting in an oversupply, and operating loss for four straight years since fiscal 2012.

While Mitsubishi Chemical will unload shares in its Chinese unit to an oil refinery in Ningbo, Zhejiang Province, it will offload those in an Indian unit to a U.S. fund that owns a chemical manufacturing plant in West Bengal state.

The two transactions are expected to total between 10 billion yen to 20 billion yen ($95.5 million to $191 million). The divestment, to be completed by the end of 2016, will cut annual revenue by 150 billion yen or so, Nikkei Asian Review said.

However, the company will keep its PTA business in Indonesia, which supplies chiefly to group operations, as well as one in South Korea where Mitsubishi Chemical holds a stake in a production facility of an affiliate not included in its group results.

Mitsubishi Chemical has been restructuring its petrochemical operations since around 2007, when Yoshimitsu Kobayashi -- the current chairman -- became the president. The company already has withdrawn from operations worth more than 300 billion yen in annual sales.

While shrinking production of ethylene and general-purpose materials, Mitsubishi Chemical will focus investment on more lucrative growth operations such as carbon fiber, health-care materials and advanced resins, it said. (SH)

Fibre2Fashion News Desk – India

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