Japanese metalworking fluids manufacturer Yushiro Chemical Industry Co. expects to complete construction of two plants in China in the second half of this year, a company official told Lube Report Asia last week.
A new plant in Qidong city, Jiangsu province, will be completed in July or August this year, the Yushiro spokesman said in a telephone interview, noting the company will shut down a nearby existing plant that is in the way of a road project.
Construction of the other plant, in Nansha District, Guangzhou City, will be completed this year, after the Qidong plant is finished, the official said.
The company did not disclose investment amounts or capacities for the new plants, but said it will be producing metalworking fluids such as cutting oils for the automotive and steel industries in China.
The companys expansion in China was mainly driven by a trend of Japan-based automakers moving abroad. Automobile manufacturers are shifting production sites offshore, and the domestic market is contracting, the company said in its 2015 fiscal year review. The volume of overseas production by domestic automobile manufacturers, our main customers, surpassed the preceding fiscal year, with seven companies recording all-time production highs, it added.
Yushiros major clients include automotive manufacturers such as Toyota and Suzuki and major Chinese steel manufactures, including Ningbo Baoxin Stainless Steel Co., a steel sheet manufacturer with Japanese partners; and HeSteel Group Ltd., which claims to be Chinas largest iron and steel business group in terms of production capacity.
Upon completion of the two plants, the company will have a total of three plants in China. The third plant is located in Guncun Industrial Park in the Baoshan District of Shanghai.Its other plants in Asia include locations in Malaysia, Thailand, India, Indonesia, Taiwan and Korea.
Despite an economic slowdown in Southeast Asia, the company was able to expand its market share in Thailand and Indonesia in recent years. While Malaysia showed a huge drop in the consumption of cutting fluids for the solar energy sector, the companys sales for the region showed a year-over-year increase of 17.6 percent, or 2,950 million yen (U.S. $26.5 million).
According to Yushiros statement for the third quarter of 2015, sales in China were hurt by a slowdown in the Chinese economy, but due to a decline in the value of the yen, the company recorded a 6.8 percent increase in sales, to 3.5 billion.