Mitsubishi Chemical plans to sell polyester feedstock business in India: Report

Mitsubishi Chemical Holdings is planning to sell its business of terephthalic acid (PTA), the primary raw material used to manufacture various polyester products, in India and China amid profitability concerns with oversupply of the acid, mainly from China, according to a Nikkei Asian Review report.

MCC PTA, Mitsubishi Chemical Corporation’s PTA venture located in Haldia (West Bengal), started commercial production at the plant in 2000 with an aim to produce high-quality products to gain market share in the ASEAN countries. But, with the onslaught of cheaper Chinese products, the company gradually lost out and decided to concentrate in the domestic market. With Chinese imports increasing manifold leading to oversupply, the venture has been incurring losses for the past few years.

According to Nikkei report, Mitsubishi Chemical will offload its share in the Indian PTA venture to a US-based fund that owns a chemical manufacturer in Haldia, West Bengal, while the Japanese firm plans to sell its shares in a Chinese unit to an oil refinery in Ningbo, Zhejiang Province. 

ALSO READ: Anti-dumping duty on PTA creates rift between producers and polyester companies

In India, PTA manufacturers - Reliance Industries and MCC PTA India - have been raising the issue of dumping in the country. This resulted in imposition of anti-dumping duty on purified terephthalic acid imports from China, Korea, Thailand and the European Union in July 2014.

However, the PTA user industry, ie polyester fibre producers, claim that anti-dumping duty has raised the raw material cost for these companies and has eroded their profit margins & made Indian polyester fibre producers less competitive globally.