Lanxess invests in Asia on positive growth outlook

China's urbanization process and its rapidly growing middle class, which together are creating increased demand for personal transportation and medical care, are the major reasons for Lanxess AG's largest-ever investment in Asia.

The Germany-based specialty chemical company invested 400 million euros ($522.6 million) in its new butyl rubber plant with an annual production capacity of 100,000 metric tons on Jurong Island in Singapore.

The goal of the plant is better serving the growing demand in the Asian market, especially China and India, said Axel C. Heitmann, chairman of the board of management of Lanxess, on Tuesday during the plant's inauguration.

"To me, this new plant is a powerful symbol of our strong belief in the bright future that lies ahead for the rubber industry and the dynamic markets of Asia," he said.

The company said world demand for butyl rubber is expected to grow at a rate of about 5 percent year-on-year through 2017 based on the current annual demand of about 1.2 million tons globally.

Among that, the demand in the Asia-Pacific region is expected to grow at 6 percent annually, while China, the largest butyl rubber consumer in Asia, has an even higher annual growth at 7.5 percent, said Ron Commander, head of butyl rubber business unit of Lanxess.

"Butyl rubber sales in Asia now represent more than 50 percent of the company's worldwide sales," he said. Half of that is generated in China alone, he added.

He said China will be the growth engine for mobility, and passenger cars in China and India are expected to more than triple to about 450 million within the next 15 years, giving the company the confidence to make its largest-ever single investment.

Although China's economic growth is slowing down to around 7 percent, which has resulted in weaker demand for many commodities, the company believes demand will pick up soon.