LG Chem, chemical and battery making unit under LG Group, is seeking to lock up first place in the global acrylonitrile butadiene styrene (ABS) market. As a high value added composite material, ABS is widely used in information technology (IT) and vehicle products due to its excellent heat resistance and processability.
LG Chem announced on November 7 that it will invest US$1 million (114.4 billion won) to expand the production capacity of ABS plastic at the Huanan factory in Guangdong Province, China, by 150,000 tons per year by the end of 2018. LG Chem established a joint venture with China's state-run petroleum and natural gas provider China National Offshore Oil Corporation (CNOOC) in 2008. With the investment, the production capacity of its plant will be doubled from the current 150,000 tons to 300,000 tons.
Previously, LG Chem said that it will modify one of two polystyrene (PS) manufacturing facilities in Yeosu, South Jeolla Province, to produce ABS products by the first half of next year to increase the annual domestic ABS output from the current 850,000 tons to 880,000 tons. The South Korean government named PS as one of the products that show supply excess in the market.
A LG Chem spokesperson said, “The company will secure the total annual ABS production capacity of 2 million tons, including the Huanan and Ningbo facilities in China and the Yeosu facility in Korea, by 2018 and boost the global market share from the current 21 percent to 26 percent.”
The latest facility expansion in Huanan will be invested only by LG Chem, allowing its share ownership to increase from the current 50 percent to 70 percent. In this case, all the sales at the Huanan facility go to the consolidated sales of LG Chem according to the equity method. Therefore, LG Chem will be able to boost its sales by 700 billion won (US$611.89 million).
Son Ok-dong, president of LG Chem’s basic materials business, said, “The latest expansion of the Huanan ABS plant is meaningful in that the company will both increase the production capacity and secure the independent management of the joint venture. We will use the as a forward base to tighten the hold of the Huanan region, the largest market in China, and tap into other emerging Southeast Asian markets.”