UpdateBayer to invest €1bn in Shanghai, eyes €5bn China sales

09 December 2010 09:47  [Source: ICIS news]

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By Alfred Wong

SHANGHAI (ICIS)--Bayer plans to invest €1bn ($1.33bn) in expanding its facilities in Shanghai, in line with its aim to generate about €5bn in total sales from the Greater China region by 2015, the German chemical producer said on Thursday.

"The expansion of our capacities in China is an important step in strengthening our presence in the emerging economies," said Bayer chairman Marijn Dekkers in a statement.

"We want to increase group sales in Greater China to around €5bn by 2015. MaterialScience is expected to contribute at least half of this amount," said Dekkers.

The target represented about a 58% surge from actual sales last year at €2.1bn, 48% of which came from Bayer’s MaterialScience (BMS) business, based on the company’s statement.

BMS's CEO Patrick Thomas told ICIS as part of the expansion plans capacity of polyurethane raw material methyl di-p-phenylene isocyanate (MDI) would be increased to 1m tonnes/year from the existing 350,000 tonnes/year, while its capacity for polycarbonate (PC) would be increased to 500,000 tonnes/year from the current 200,000 tonnes/year.

"The existing MDI capacities in our Caojing facility are 350,000 tonnes/year and we are going to add 500,000 tonnes/year. With debottlenecking on the existing facilities, we will be able to make it 1m tonnes/year," he said.

He said the existing 200,000 tonnes/year PC capacity would be raised to 300,000 tonnes/year through debottlenecking, while an additional 200,000 tonnes/year would be added to make the total capacity 500,000 tonnes/year.

All new expansions were expected to come on stream by 2016, depending on market conditions, he said.

Thomas said the headquarters of the PC business unit would be relocated to Shanghai from Leverkusen, ensuring greater proximity to the booming PC market in Asia.

"We signed a memorandum with the Shanghai municipal government on the expansion yesterday [Wednesday]," he added.

Thomas said the company’s global sales growth in the first three quarters of this year was around 30% year on year and it would be a bit less than that for the full 2010 because of the seasonal holiday factor in the fourth quarter.

"We are seeing a fast recovery from the recession and we are close to the pre-recession level," he said.

“We expected 12 months ago that full recovery would come in 2012 and it's surely happening faster."

The company's global revenue would grow at 5-10% and that of China at 13%, he said.

In fiscal 2009, the Bayer group in Greater China recorded sales of €2.1bn, of which €1.2bn was accounted for by BMS.

($1 = €0.75)

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By: Alfred Wong
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