Energy News
Thu, 29 Apr 1999, 7:32am EDT
Beijing Yanhua to Spend 5.1 Bln Yuan in Next 3 Yrs on Expansion
Hong Kong, April 29 (Bloomberg) -- Beijing Yanhua Petrochemical Co., China's biggest plastics maker, said it will spend 5.1 billion yuan ($614.5 million) to increase production capacity and cut costs as demand rises.
Chinese demand for resins and plastics will likely grow 6 percent a year in the next three years, said Cao Xianghong, the company's chairman. ''We will achieve greater economies of scale and reduce our
unit cost of production by expanding our production capacity,'' said Cao.
''China's production of petrochemical products cannot meet its demand and so there is scope for growth for competitive Chinese producers.''
China's production of petrochemical products meets about half of the country's demand. A 27 percent increase in domestic production last year still left China with a shortage of 4.5 million tons of resins and plastics, analysts said.
The company's capital expenditure for this year will amount to 1.4 billion yuan. It will rise to 2 billion yuan in 2000 and then decrease to 1.7 billion yuan in 2001, said Qi Jiren, an executive director at Beijing Yanhua.
About 3.84 billion yuan will go to expanding the company's annual ethylene production capacity to 660,000 tons in 2001 from 450,000 tons today. The project, which will have a return on investment of 12 percent, will help cut the company's unit cost of ethylene production by 7 percent.
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