29 September 2009 11:37 [Source: ICIS news]
TOKYO (ICIS news)--Mitsubishi Rayon plans to sell all of its shares in its wholly owned China-based acrylic fibre subsidiary to two local fibre producers due to declining demand in China and elsewhere in the world, a company official said on Tuesday.
The company will sell its shares in Ningbo Rayon Acrylic Fibers Co to Hong Kong-based Fordking and Jiangsu-based Nantong Zhongxin Textile and Dyeing for a total sum of yen (Y) 1.5bn ($16.7m), according to the official.
Nantong Zhongxin and Fordking will hold stakes of 75% and 25%, respectively, in Ningbo Rayon.
The sale would result in Mitsubishi Rayon’s complete withdrawal from acrylic fibre production in ?xml:namespace>
Mitsubishi Rayon decided to sell Ningbo Rayon mainly because worldwide acrylic fibre demand was decreasing due to intense competition with polyester fibres, and it was not expected to recover, the official said.
According to the official, global acrylic fibre demand fell to below 2m tonnes in 2008 from over 2.5m tonnes in 2006.
The source added that Chinese demand was expected to remain low, at 750,000-760,000 tonnes in 2009.
The official also cited increasing feedstock costs as another reason for Mitsubishi Rayon's withdrawal from acrylic fibre production.
Mitsubishi Rayon has been restructuring its entire acrylic fibre business, which has seen it withdraw from acrylic fibre spinning businesses in
The company planned to focus on producing value-added acrylic fibre products at its Otake factory, in
As a result of the sale of its shares in Ningbo Rayon, Mitsubishi Rayon would record extraordinary income of Y1.4bn in the third quarter ending December 2009, the company said in a statement.
($1 = Y89.78)
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