UCHA, IRPC to invest jointly in raw-material plant

The plant will serve the current strong demand for a broad range of petrochemical products used in auto parts, food packaging and clothing. Caprolactam is a compound used to make raw materials in the production of fibres and plastics.
The firms signed a business partnership yesterday. The move is part of a broad plan to engage in joint development of new projects and products between UBE Group and PTT.
Under the agreement, IRPC will acquire a 25-per-cent equity share of UCHA. The transaction is worth Bt5.3 billion.
“The new caprolactam factory is expected to be complete in 2016. In the first stage, the output will be for export,” said Charunya Phichitkul, president and chief executive officer of UBE Chemicals (Asia), a Japan-based caprolactam producer.
He added that at the new factory, UCHA would produce fertiliser with capacity of 600,000 tonnes a year. However, it has yet to be decided where the new facility will be located. It is possible that it will be set up at IRPC’s industrial park in Rayong.
Atikom Terbsiri, president of IRPC, said the business partnership with UCHA would strengthen his company’s business potential, ranging from an engineering plastics assembly line to meeting demand in the auto-parts, food-packaging, textiles and fertiliser markets under the firm’s “Phoenix” business strategy.
By acquiring UCHA shares, IRPC also expects to become a top-quartile integrated petrochemical complex in Asia by 2014 with a broad range of products in the auto-parts, food-packaging and clothing sectors.
“A 25-per-cent stake is enough to be a strategic partner and ensure minority protection,” he said.
Atikom said this investment would help the company’s revenues through the sale of new, high-quality materials and related services, as well as facilitating knowledge transfer from the Japanese partner, which has expertise in producing petrochemical products.
UCHA, whose caprolactam factory is in IRPC’s industrial park, could also help IRPC manage and apply resources more effectively, he said.
Last year, UCHA’s caprolactam factory ran at capacity of 130,000 tonnes a year, which was expanded from 110,000 tonnes a year previously.
UCHA is part of UBE (Thailand), which emerged from an amalgamation between Caprolactam Plc and UBE Nylon (Thailand) in 2010. The company has annual capacity to produce 130,000 tonnes of caprolactam, 540,000 tonnes of ammonium sulphate, 75,000 tonnes of nylon-6 and 11,000 tonnes of nylon.
Charunya said UCHA expected sales this year to reach Bt19 billion, compared with Bt16 billion last year.
IRPC expects a 15-per-cent increase in sales for this full year, as the world economic situation should improve in the second half, Atikom said, adding that the company had already hedged 30 per cent of total oil stock.