Corrected: Japan’s AGC to invest over Y100bn to expand Thailand chlor-alkali capacity

Pearl Bantillo

11-May-2022

Correction: In the ICIS story headlined ” Japan’s AGC to invest over Y100bn to expand Thailand chlor-alkali capacity”, dated 11 May 2022, reference to Indonesian operations and company were removed in paragraphs 4 and 5 as they will not be consolidated under the new company AGC Vinythai. A corrected story follows.

SINGAPORE (ICIS)–Japan’s AGC Inc will invest more than yen (Y) 100bn ($767m) to raise its chlor-alkali production capacity in Thailand by the first quarter of 2025.

The planned expansion at its two sites in Thailand will increase AGC’s southeast Asia annual production capacity for caustic soda by 15% to 1.64m tonnes/year; for vinyl chloride monomer (VCM) by 31% to 1.7m tonnes; and for polyvinyl chloride (PVC) by 33% to 1.6m tonnes.

This is “the largest investment ever made by the AGC Group”, the Tokyo-headquartered glass, chemicals and high-tech materials producer said in a statement dated 6 May.

In line with the expansion, AGC is consolidating its chlor-alkali operations in Thailand and Vietnam under a new company called AGC Vinythai Public Co Ltd, which will be established in July 2022.

The consolidation will cover AGC Chemicals (Thailand) Co Ltd and Vinythai Public Co Ltd; and AGC Chemicals Vietnam Co Ltd.
Source: AGC

The capacity expansion is being pursued in view of an expected robust demand growth for chlor-alkali products in southeast Asia.

The region’s annual demand growth for caustic soda and PVC is forecast at 4% “on the back of continued expansion in manufacturing and infrastructure projects in line with economic growth.”

“The AGC Group aims to expand its chlor-alkali chemicals business in Southeast Asia as one of the priority businesses of the AGC plus-2023 medium-term management plan,” the company said.

PVC is used for applications including pipes and profiles in the construction and agricultural sectors, which have seen relatively steady demand across Asia, with the exception of China, where lockdowns have stifled domestic consumption.

This has also spurred producers in China to turn to export markets, leading to greater spot availability in Asia, with spot PVC CFR (cost & freight) China prices stable since late April.

Caustic soda has uses in the manufacture of pulp and paper products, alumina, soap, water treatment, and textiles.

Demand for Asian material has been outpacing regional supply due to an open arbitrage window to Europe, where surging power costs amid the Ukraine-Russia war have led to higher production expenses.

($1 = Y130.40)

(Adds para 9-12)

Additional reporting by Jonathan Chou

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