TOKYO -- As Chinese silicone makers lose momentum amid tighter domestic regulations and the effects of the trade war with the U.S., Japan's Shin-Etsu Chemical is planning to increase production by 50% from the current level.
The Japanese chemical maker plans to spend 110 billion yen ($991 million) to expand capacity in Japan, Thailand and the U.S.
Silicone is used in a range of products, from plastic auto parts to cosmetics.
The expansion is aimed at gaining more market share as the global silicone market has tightened after Chinese manufacturers were forced to suspend plant operations due to tighter environmental regulations. Chinese manufacturers have also been hindered in the U.S. since late last month, when President Donald Trump added more Chinese products to a tariff list.
For the expansion, Shin-Etsu plans to spend 50 billion yen on production equipment for monomers, an intermediate material for silicone production. The money will also buy machinery to make resins, rubbers, liquids and other final products.
Monomer plants in Japan's Gunma Prefecture and Thailand as well as final-product factories in the U.S., China, the Netherlands, South Korea and elsewhere will be expanded.
Shin-Etsu did not disclose specifics of its capacity increases, but it plans to increase output by 50% from the current level by the end of 2020.
China became the world's largest silicone-producing country after intensive investments to boost capacity. But the global market has grown tighter as a number of Chinese plants were forced to suspend operations due to tighter environmental regulations.
Chinese chemical makers then suffered another blow as Washington included silicone in the list of items subject to punitive tariffs against Chinese products, introduced on Aug. 23.
Chinese exports to the U.S. in the six months to June quadrupled from a year earlier to $84.5 million.
Shin-Etsu plans to supply monomer and final products to take advantage of the scarcity left by its Chinese rivals.
The chemical maker has the fourth largest share of the global silicone market. U.S. chemical maker DowDuPont is No. 1, followed by Germany's Wacker Chemie and Momentive Performance Materials of the U.S. But the Shin-Etsu's latest plan is expected to make the Japanese company No. 3.