ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Companies

Mitsubishi Chemical plans $915m US plant as Buy American pressure rises

Japanese company plans to start production of plastic ingredient in Louisiana in 2025

Mitubishi Chemical's MMA plant in Singapore. The Japanese company is planning to build a new plant in Lousiana, U.S. that it hopes will begin operation in 2025. (photo courtesy of Mitsubishi Chemical)

TOKYO -- Japan's Mitsubishi Chemical will spend over 100 billion yen ($915 million) to build a plant in the U.S. state of Louisiana for a key ingredient in plastics, Nikkei has learned.

The investment will boost production of methyl methacrylate, or MMA, in the U.S. The raw material is used to manufacture acrylic plastics used in a wide range of products, including auto parts and house paint.

The move comes as global manufacturers face the prospect of stronger preferences for U.S.-made products, with the Biden administration proposing to tighten so-called Buy American rules for government procurement.

The factory will start operations in 2025 with an aim to reach annual production capacity of 350,000 tons.This would make it Mitsubishi Chemical's largest MMA plant in the world, equivalent to about 10% of total global demand.

The company holds a roughly 40% global market share for the material. The new factory will raise Mitsubishi Chemical's overall supply capacity by 20%.

The company has already acquired the site and is hashing out further details. Its overall investment could increase to around 150 billion yen.

Methyl methacrylate, or MMA, is used to make plastics like those used in car tail lamp covers. (Photo courtesy of Mitsubishi Chemical)

Mitsubishi Chemical plans to introduce its proprietary manufacturing process, which it uses at its Saudi Arabia plant, at the new factory. The cost of manufacturing is believed to be less than half of that of their Chinese counterparts who use general manufacturing methods. Mitsubishi Chemical is able to reduce production costs by using ethylene derived from U.S. shale gas.

The Biden administration's proposed changes to Buy American rules would make it harder for products bought with taxpayer money to pass the "Made in the USA" test. The minimum level of domestic content would first rise to 60% from 55%, eventually reaching 75% by 2029. 

The Biden administration signed a $1.9 trillion stimulus package in March and is making progress on a $2 trillion infrastructure plan. Expectations for economic growth are driving a number of Japanese companies to add to their U.S. capacity, including Nippon Steel and Shin-Etsu Chemical, one of the world's largest makers of PVC.

The U.S. economy is expected to grow 6.9% in 2021, slower than China's 8.5% expansion but faster than Japan's 2.6%, the eurozone's 4.3% and global growth of 5.8%, according to OECD forecasts.

According to Japan's Ministry of Finance, foreign direct investment by Japanese companies reached nearly 5.9 trillion yen during January to March, up 5.4% from a year ago. Investments into the U.S. increased about 40% to almost 2.5 trillion yen.The figure is a big jump even when compared with same quarter in the year before the coronavirus pandemic, representing an increase of about 40%.

Meanwhile, Japanese investments into China declined 45% in the three months through March to 184 billion yen.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more