V-Tech to close Japan PVC unit on low profits

10 April 2008 10:52  [Source: ICIS news]

TOKYO (ICIS news)--V-Tech Corp, Mitsubishi Chemical’s (MCC) Tokyo-based subsidiary, plans to reduce production and stop export of polyvinyl chloride (PVC) after it closed its PVC unit in Mizushima, Okayama prefecture by the end of May as the business was unprofitable, the company said on Thursday.

The company also planned to upgrade and increase capacity at its PVC unit in Kawasaki, Kanagawa prefecture during a turnaround in July, it added in a statement but did not provide further details.

V-Tech presently has a PVC capacity of 304,000 tonnes/year and this would fall to 220,000 tonnes/year, once these developments came into effect, it said.

Most of the PVC and vinyl chloride monomer (VCM) produced at the Mizushima unit was primarily for exports, the chemicals firm added.

V-Tech had been exporting PVC to China, and had expanded its exports to other countries including Turkey and Egypt in the latter half of 2007 to compensate for decreasing demand in Japan, the company said.

However, a steady rise in the cost of production and freight rates as well as a strengthening of the Japanese yen against the dollar led to a decline in the profitability of PVC exports, it added.

Production costs were expected to rise further as the price of industrial salt, which had been stable until recently, was forecast to skyrocket after April, and rising naphtha and crude oil prices were also exerting pressure on the prices, the company said.

V-Tech also planned to make adjustments to the VCM unit and the electrolysis plant at Mizushima after it stopped production at the PVC unit, the company said.  

V-Tech is a joint venture between MCC and Japanese chemical producer Toagosei, in which MCC holds an 85.1% share.  

By: Tomomi Yokomura
+65 6780 4359

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