Engelhard Corp will sign a letter of intent with China Petrochemical Corp (Sinopec) today to establish a catalyst manufacturing joint venture, marking the first mainland investment by the United States group. The joint venture, for making and selling fluid cracking catalysts (FCC), will be formed with Changling Petroleum Process and Chemical Complex of Baling Co in Changsha, Hunan province. Changling is one of three major FCC manufacturing bases under state-owned Sinopec, which has cornered 90 per cent of the FCC market in China. Engelhard group vice-president William Gustafson said both parties, which intended to hold equal stakes, were looking into the scale and investment of the venture and a feasibility study would be completed by July next year. A world-class facility for manufacturing FCC would usually have an annual production capacity of 40,000 to 50,000 tonnes, costing about US$50 million to $100 million, depending on design, he said. The FCC produced by the venture, which is used by petroleum refiners to break down crude oil into petrol and other products, will be for domestic sales as well as exports. The world market consumes about 500,000 tonnes of FCC a year and Mr Gustafson expects demand to grow to 600,000 tonnes over the next five years. The FCC market in China and the rest of Asia is expected to grow 50 per cent by 2000. George Hsu, vice-president of Engelhard's Asia-Pacific operations, said the group was also looking into opportunities for making kaolin, a major raw material in manufacturing FCC, on the mainland.