Japan's packaging industry expands into SE Asia

JAPAN - Japan’s direct foreign investments have surged since the catastrophes of 2011, a trend that also boomed in the 1980s and 1990s as Japanese companies set up production facilities overseas so that they could benefit from improved economies of scale and lower costs.

Although the reasons for this concerted push might be slightly different following the earthquake and tsunami, investments have picked up across the entire supply chain. Japanese chemical companies have also been ramping up their Asian production with major regional investments.

Mitsui Chemicals (MCI) is to produce Evolue metallocene linear-low-density polyethylene (mLLDPE) in Singapore and beef up its bisphenol A (BPA) capacity in China as part of a strategy to become the world’s leading manufacturer of mLLDPE and phenolic products.

With headquarters in Tokyo, MCI has 15 subsidiaries in ASEAN countries and India, and has positioned Singapore as the key regional production and sales base for its global business.

It recently opened an R&D Centre in Singapore for Evolue mLLDPE, which is produced by polymerising ethylene and higher alpha olefin (hexane-1) using gas-phase polymerisation.

The group currently has three subsidiaries in Singapore, and in April last year head office operations for the high performance elastomer TAFMER, in which MCI holds the world’s top share, were transferred to Singapore.

In China, MCI has a BPA plant in Shanghai with capacity of 120,000 tonnes per year – part of a 50:50 joint venture with China’s leading petrochemical conglomerate Sinopec.

“While we might be reducing our capacity in Japan, we will continue to increase our production in China. We will expand our BPA capacity in China further, possibly by 2012-2013,” Mitsui said in a statement to the Tokyo Stock Exchange.

Toyo Ink SC Holdings Company is building a production facility in Indonesia for the production of plastics colourants for containers and packaging materials. The colourants will be sold in the domestic Indonesian market, where the company also operates a gravure ink plant in the suburbs of Jakarta under its subsidiary PT Toyo Ink Indonesia.

Toyo Ink acquired an additional 50,000-sqm site with construction beginning ahead of schedule in October 2011, aiming for completion in August 2012. The company plans to start production with 3-4 extruders and to subsequently expand production facilities in phases.

The new facility will produce colourants for containers and packaging materials, which Toyo Ink Indonesia previously imported from Toyo Ink Group manufacturing bases in Japan to sell on the Indonesian market. It has a target monthly production volume in excess of 500 tonnes by the end of 2012, ramping up to an annual production volume of more than 10,000 tonnes from 2014 onwards.

Teijin Limited recently announced that DuPont Teijin Films will increase its production of polyester film at DuPont Hongji Films Foshan Co (DPHJ) in Guangdong, China.

DPHJ is a joint venture between FSPG Hi-Tech Co Ltd and DuPont Teijin Films - Teijin’s global joint venture partnership with E.I. du Pont de Nemours and Co.

With a capital expenditure of US$78m, DPHJ will acquire a new site in NanZhuang in the ChanCheng district of Foshan City to construct two polyester film lines, one for thick film and the other for thin film production.

The thick film line will use a currently inactive production line relocated from Japan and operations are expected to start by the second half of 2012.

Meanwhile, the thin film line will focus on mainly dry film resists (lamination) and flat panel displays. Operations will begin in 2013 and are expected to increase DPHJ’s annual PE film production capacity in Foshan from 50,000 tonnes to 77,000 tonnes.

Mitsubishi Chemical Holdings is also rapidly expanding in the region. According to chief executive Yoshimitsu Kobayashi, the company aims to “expand operations through partnerships with overseas leading companies”, to help rebuild Japan’s supply chain.

The company’s major expansion initiatives during the first half of 2011 included a joint venture with China’s Sinopec to open new plants for BPA and polycarbonate (PC) resins in Beijing, all of which are expected to be on line by the end of 2011.

In April last year, Mitsubishi Chemical Corporation established a 50:50 joint venture with PTT Public Company Limited in Thailand to accelerate production of biodegradable plastic GS PLA – the partners have jointly invested US$232 million in the venture with production due to start by late 2014 - construction of the plant will start early this year.

In addition, Mitsubishi Chemical sealed a business partnership deal last April with BioAmber and Mitsui & Co (which has equity in BioAmber). The partnership will focus on supplying biomass succinic acid, conducting R&D, and production technologies for the biodegradable GS PLA.

In May 2011, Mitsubishi also announced an increase in PVC compound production capacity in Thailand from 15,000 to 19,000 tonnes per year. There are no plans, so far, to slow construction as a result of the Thai floods.

In China, Mitsubishi Chemical Corporation has established a new production facility for olefin thermoplastic elastomer and adhesive polymer with a capacity of 4,500 tonnes per year.

The company also plans to expand a production facility for olefin thermoplastic elastomer and adhesive polymer in North America with an increase of 1,900 tonnes over its current capacity of 9,200 tonnes per year.