Nippon Polyurethane Industry Co., Ltd. (Headquarters: Minato-ku, Tokyo; President: Kouji Fujii) will construct a new MDI (diphenylmethane diisocyanate) splitter (separation and purification) facility in Zhejiang Province, China, in order to respond to strong demand growth in China for the material.

Nippon Poloyurethane Industry has established a wholly-owned production and sales company in the Ruian Economic Development Zone, Zhejiang Province, with the intent of constructing a new plant with annual production capacity of 50,000 metric tons/yr and entering into commercial production around the summer of 2007.

Up to now, Nippon Polyurethane Industry has produced crude MDI (precursor) at its Nanyo plant in Yamaguchi Prefecture, and this was separated and purified at the same location into monomeric MDI and polymeric MDI before export of the products to Chinese customers. However, by locating the separation facility close to the market, the company decided that it would be able to respond to customer needs and market trends in more detail.

Nippon Polyurethane (Ruian) Co., Ltd. (capitalization: $12 million) is the new company that has been established and while marketing approval had already been obtained from the Chinese Government, because the environmental assessment required for plant construction has recently been obtained from Chinese authorities, the company is now at a stage where construction will start shortly.

Monomeric MDI is primarily utilized as the main raw material for spandex, shoe soles, synthetic leather, and TPU (thermoplastic polyurethane resins), and because the production bases for these products have shifted to Asia, headed by China, in recent years, significant growth in demand is anticipated to continue in the future. Meanwhile, polymeric MDI is employed in various types of insulation material, automotive interior materials, and as a particle board binder, and growth in demand is forecast accompanying expanding insulation materials applications due to greater needs for energy conservation and increasing automobile production. In the past several years, MDI demand has been growing in the Asian region, centered on China, by around 10% per annum, and high growth rates are forecast to continue in the future.

Nippon Polyurethane Industry possesses a 200,000-metric ton/yr MDI plant located at its Nanyo site in Shunan City, Yamaguchi Prefecture and it has already decided to add a new 200,000-metric ton/yr MDI plant there, with completion targeted in October 2007, in order to respond to increasing demand in the Asian region. This second facility will be located within Tosoh's adjacent Nanyo plant site. Through establishment of the new company, localization on the supply side will be realized, joining the local operations Nippon Polyurethane (Shanghai) Co., Ltd., established in 2004, and Nippon Polyurethane R&D (Shanghai) Co., established in 2002. By further augmenting manufacturing, sales and marketing, and technical support capabilities in the Chinese market, Nippon Polyurethane Industry believes that it can contribute to growth in China's MDI industry through stable product supply, in terms of both quality and volume.