Business News
Teijin Fibers and Showa Shell Sekiyu to Launch Paraxylene Sales JV
Monday 28. April 2008 - Teijin Fibers Limited and Showa Shell Sekiyu K.K. announced today their agreement to establish a joint-venture company to sell paraxylene products.
The new JV will leverage the partners’ mutual strengths for the stable supply and procurement of mixed xylene, thereby enabling Teijin Fibers to improve earnings from its polyester business and Showa Shell Sekiyu to expand its petrochemical business.
Other opportunities for collaboration are also being explored.
Background and purpose
1. Supported by strong demand for polyester in Asia, global demand is also steadily increasing for materials in the polyester production chain, including naphtha, mixed xylene, paraxylene and terephthalic acid.
2. Market demand for paraxylene, particularly in Asia, is especially strong. In Japan, about 3.36 million tons were manufactured in fiscal 2006, and domestic consumption came to 1.07 million tons.
3. Teijin Fibers produces 290,000 tons of paraxylene annually at its Matsuyama factory. It is used as a polyester raw material in the Teijin Group, and is also sold outside the group.
4. Showa Shell Sekiyu group produces mixed xylene and sells it mainly to paraxylene manufacturers, including Teijin Fibers.
5. The JV will provide Showa Shell Sekiyu with a stable demand for mixed xylene, and enable it to enter into the petrochemical field. For Teijin Fibers, the JV will secure a stable supply of mixed xylene and ensure the stable production of paraxylene, thereby helping to enhance the competitiveness of polyester business in the Teijin Group.
Envisioned business
1. The joint venture will enable Teijin Fibers to spin off its paraxylene business as a separate company owned together with Showa Shell Sekiyu and Mitsubishi Corporation.
2. The JV will procure mixed xylene and produce paraxylene under commission by Teijin Fibers, and sell the product to Teijin Fibers and other companies.
3. Showa Shell Sekiyu will supply the JV with mixed xylene.
4. Teijin Fibers will purchase paraxylene as a raw material for the production of polyester within Teijin Group.
5. Showa Shell Sekiyu and Teijin Fibers will offer competitive products and services by cooperating in the supply of mixed xylene and the production and sale of paraxylene.
Outline of joint-venture company
Company name: TS Aromatics Limited
Business launch: April 1st, 2008
Address: 3-2-1 Kasumigaseki, Chiyoda-ku, Tokyo, Japan
Capital: 100 million yen
Ownership: Teijin Fibers: 50.1%, Showa Shell Sekiyu: 44.9%,
Mitsubishi Corporation: 5.0%
Representative: To be decided
Business: Manufacture of paraxylene and related products under consignment from Teijin Fibers, and sale of products to manufacturers.
Sales target: 45 billion yen in fiscal 2008