The Dow Chemical Company has announced that it will proceed with construction of a new propylene oxide-based glycol ethers facility at Zhangjiagang, Jiangsu Province, the People's Republic of China. This state-of-the-art facility is scheduled to come on line in late 2008, with an annual nameplate capacity of 120,000 metric tons. PCI asked Martin Sutcliffe, Dow's global business director for the Glycol Ethers business, some questions regarding this new facility and the business climate in China.

1. Why is Dow building a new glycol ethers unit in Asia Pacific?

Demand for P-series glycol ethers continues to outpace supply in Asia Pacific due to continued growth in the electronics, and paints and coatings sectors. Today, more than 60 percent of the Asia Pacific demand for P-series glycol ethers is met with product from North America and Europe. A significant amount of this product comes from Dow's world-scale facilities in Stade, Germany, and Plaquemine, La., This new facility will allow us to provide our customers with a stable, local, reliable source of P-series glycol ethers well into the future.

2. In what sectors of the industry do you see the greatest growth in China now? What are the biggest growth areas in the Industrial sector?

Architectural and industrial coatings continue to grow at a rapid pace, with architectural coatings accounting for approximately 50 percent of China coatings production. Growth is expected, as well, in wood, powder, automotive and plastics coatings. DOWANOL™ P-Series glycol ethers and acetates are also finding favor as a replacement for other solvents which have a less EH&S profile.

Protective coatings is the largest application area for DOWANOL P-Series glycol ethers. Resin manufacturers, coatings formulators and coatings applicators use these products in protective coatings for industrial, automotive and architectural applications.

3. Are liquid coatings primarily waterborne or solventborne?

We anticipate that solventborne liquid coatings will grow sharply in the next five years. However, demand for waterborne coatings is expected to increase in three to five years, as more stringent environmental regulations take hold in China.

4. How many plants do you currently have in China, and what are your long-term goals for further growth there?

The new P-series facility in Zhangjiagang will be Dow's first glycol ether facility in China. E-series glycol ethers from Dow are manufactured in Kerteh, Malaysia, by OPTIMAL, a joint venture between Union Carbide Corporation and Petronas. Union Carbide is a wholly owned subsidiary of The Dow Chemical Company. Although we cannot provide specifics on our future asset structure, we can tell you that it will be primarily market driven.

5. Is the quality control effort in China's coatings manufacturing facilities improving? What about at the raw material plants?

We believe that as multinational companies establish themselves in this part of the world, customers will begin to expect the level of quality these companies can provide. This would have a positive impact on local producers.

6. Why did Dow choose Zhangjiagang as the site for the new facility?

Zhangjiagang was chosen, in large part, because of its proximity to glycol ethers customers in the major established markets of Japan, Korea and Taiwan, as well as a growing number of customers in China. Other key factors included the economics of sharing operational and infrastructure costs with other Dow plants at ZJG and the exceptional safety performance of the site. One of the most appealing features of the site is the marine jetty on the Yangtze River, which will allow us to ship raw materials and products by barge, safely and efficiently. We will follow best practices established at the site for offloading raw materials.

7. What are the environmental regulations for coatings in China compared to Europe and the United States?

Although regulations in China may differ from those in Europe and the United States, all trends suggest that they are improving. For example, we have seen evidence that solvent suppliers are moving toward more environmentally friendly solvents. And, as Dow begins construction of our new glycol ethers facility in China, we will adhere to the same, rigorous safety standards we have in place at our facilities around the world.

8. Where will Dow source the PO for this facility?

We are not at liberty to discuss specific raw material sourcing. However, it is important to note that Dow is the largest, single producer of propylene oxide with an annual capacity of around 1.9 million tons. As such, Dow has a number of sourcing options for PO.