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4 Des 2009

Frbiz.com Reports Production Starts At Evonik's Shanghai Facility

By Tian Li

German industrial group Evonik yesterday began operating its 2.5-billion-yuan specialty chemicals facility in Shanghai in a bid to tap growing domestic demand. The facility can produce annually 100,000 tons of methyl methacrylate (MMA), the derivatives of which are used mainly for LCD screens, and in the construction and automotive industries.

The facility, which is also the company's second largest investment ever in the chemicals business, shows Evonik "is continuing to focus on what will be the largest and fastest growing market in the world", said Klaus Engel, chairman of the executive board of Evonik Industries AG.

The Chinese market accounts for around 7 percent of Evonik's global chemicals business, said Yu Dahai, president of Evonik Greater China.

The company plans to increase medium-term sales in the country to around 2 billion euros, by when it would account for 15 percent of its global revenue, said Yu. Last year, Evonik's sales in China were worth 821 million euros. "We will focus more on organic growth in China in the future," said Yu, adding that Evonik will also look at some merger and acquisition opportunities in the country.

At present, there are numerous small chemicals producers using outdated technology in China, but the sector is expected to consolidate in the next few years, said analysts. Around half of Evonik's production will be for domestic consumption, while the rest would be exported, said Yu.

The global market for MMA products is growing by about 5 percent annually, with Asia driving this expansion, the company said. Evonik has implemented an integrated production concept by optimizing the use of production facilities and raw materials, in a bid to protect the environment and help in sustainable development, said Patrik Wohlhauser, chairman of the management board of Evonik Degussa GmbH.

Evonik operates in three business domains - chemicals, energy and real estate. It has been producing specialty chemical products in China since the early'90s. The company now has a total of 20 companies and 16 production sites in China, with around 4,000 employees.

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