LG Chem, South Korea's largest chemical firm, plans to expand its mainland production capacity for plastic materials as part of its aim to become the No 3 maker of polyvinyl chloride (PVC) by 2005. The company is hoping to tap the mainland's fast-growing construction materials market as well as the car and electronics industries, which use large amounts of acrylonitrile butadiene-styrene (ABS). LG Chem's joint venture with state-owned Yongxing Chemical is the largest ABS manufacturer in China. Deputy manager of international media relations Theodore Kim said: 'China is one of the fastest-growing petrochemicals markets in the world. We are expecting annual growth of 11 per cent to 20 per cent in the next few years.' LG Chem was part of the LG conglomerate, the member firms of which shared the same brand and cross-held each other's shares. But a restructuring in April last year saw LG Chemical spin off into petrochemical-maker LG Chem, cosmetic and household goods maker LG Household & Healthcare, and holding company LG Chem Investment. The demerger, which eliminated much of the cross-holdings, was prompted by corporate governance concerns and the difficulty investors had in understanding the complex business structure. LG Chem is planning to expand the annual capacity of its PVC plant, a joint venture with state-owned Dagu Chemical in Tianjin, from 240,000 tonnes to 340,000 tonnes next year and to 640,000 tonnes in 2005. The expansion is expected to rank LG Chem as the mainland's third-largest PVC producer, after Shanghai Tianyuan Group and Qilu Petrochemical, which are forecast to each expand their capacity to 700,000 tonnes a year by 2005. About 100,000 tonnes of annual capacity increase will come from expanding its Tianjin plant and the remaining 300,000-tonne capacity will come from a new plant, the location of which has not yet been decided. Mr Kim would not reveal when construction would begin or the estimated investment involved, but said the plant was due to be completed in 2005. When it announced a previous expansion, LG Chem said it would cost US$10 million to raise capacity from 150,000 tonnes to 240,000 tonnes, which would raise more than US$49 million a year in additional sales. LG Chem is also soon expected to complete the expansion of its mainland ABS plant from 125,000 tonnes a year last year to 500,000 tonnes in 2004. With the expansion of LG Chem and its competitors, the company expects PVC imports' share of total demand to fall from 31.7 per cent last year to an estimated 19.6 per cent in 2005.