China's Sinopec, Asia's largest oil refiner, said Monday that it would team up with Japan's Mitsui Chemicals to invest a combined 60 billion yen (732 million dollars) to build two plants in Shanghai.
The factories will produce phenol and ethylene propylene terpolymer (EPT), which are used to make auto parts such as seal strip for car windows and rubber tubes, an executive with the Chinese firm, who declined to be named, told AFP.
"This is an intent of cooperation reached by the two parties," the executive said, adding that no contract had yet been signed.
The two companies plan to set up a 50-50 joint venture to build the phenol plant, which is expected to come onstream in the second quarter of 2013 with an annual capacity of producing 250,000 tonnes of the chemical, he said.
Output at the EPT plant is projected to be 75,000 tonnes a year, with operations to start in the fourth quarter of 2013, he added.
"We think they are to meet mainly domestic demand as the (Chinese) auto market is growing fast," the Sinopec executive said.
Forty-five percent of Japan's petrochemicals exports are sold to China, whose demand for the products has been growing at an annualized rate of six percent, according to a report by the Japanese business newspaper Nikkei.
Japan's major chemicals companies are linking up with petrochemicals giants in China and the Middle East as domestic demand has slumped, it said.
China became the world's largest car market in January when sales here outstripped those in the United States for the first time. Auto output in the country is expected to reach 12 million for all of 2009.
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