Borouge's investment fuels growth impetus in China

2009-6-20 9:57:09

Abu Dhabi-based polyolefins supplier Borouge Pte Ltd. is forging ahead with its investment in China and the Middle East to support fast growth in the Chinese market, in spite of the global economic downturn and market fluctuation.

“Demand in China has picked up in the last couple of months, and government stimulus packages are turning out good results here,” said Chief Executive Officer William Yau in an interview at Chinaplas.

A joint venture between Borealis and Abu Dhabi National Oil Co., Borouge has participated in China’s government projects, such as water supply systems in the post-quake Sichuan region.

“Of course, we want to do more,” Yau said.

Yau joined the company in November 2008 and is now based in Singapore.

“People seem to be quite optimistic in China, which is very important,” he told Plastics News. He added that Borouge’s main target markets, such as infrastructure, automotive and other high-value-adding applications, enjoys more stability than the market average.

Borouge is currently building a compounding facility in Fengxian District of Shanghai. The plant is expected to go on stream in mid-2010 with initial capacity of 50,000 metric tons of polypropylene compounds annually. With a clear focus on the automotive industry, the unit has the potential to ramp up to 80,000 tons. “If the demand is strong, which is likely to be case, we’ve reserved additional land and can expand further.”

Yau believes that the company’s business in China will grow much faster than the rest of the world, “partly because we are speeding up our investment here, and partly because the demand is pretty strong here.”

In order to get closer the customers and serve the market better, Borouge is setting up logistics hubs in the region. Yau said the Shanghai logistics center will be able to handle 600,000 metric tons of materials annually, the Guangzhou hub 250,000 metric tons, and the Singapore center 330,000 metric tons, once they become operational next year.

These logistics centers will be equipped with packaging lines that can, depending on customer needs, pack pellets from containers into bags and deliver to customers around the area.

Borouge outsources the construction and operations of the logistics hubs, Yau said. The contract value will be $200 million over the next 10 years for the Shanghai hub, and more than $100 million for the Guangzhou hub.

The company’s investment in production also is proceeding in the Middle East. The Borouge 2 project will be completed by next year, bringing current capacity of 600,000 metric tons of polyolefins up to 2 million metric tons. The number will rise again to 4.5 million metric tons by the end of 2013 with Borouge 3 coming on stream.

With offices in Hong Kong, Beijing and Shanghai, Borouge plans to set up an office in Guangzhou.

Yau said the company also operates a sales center in Mumbai, India, and he “wouldn’t rule out the possibility of a logistics center” in India in the future.

At the Chinaplas show, Borouge also inaugurated the Borouge Undergraduate Scholarship program by signing agreements with the South China University of Technology in Guangzhou and the East China University of Science and Technology in Shanghai.

 

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