German specialty chemicals manufacturer Lanxess Thursday began operating a 50-million-yuan lubricant oil additives plant in Qingdao in eastern Shandong province.

The plant is its third major investment in the city. Lanxess already has production facilities for additives and products for the rubber industry, and a rubber research center, in Qingdao.

China's market for lubricants is growing much faster than the world average.

Products at the Qingdao plant are more environment-friendly than conventional ones and Lanxess will focus on the development of green products in China, said Martin Kraemer, CEO (Greater China), Lanxess.

The company will give equal importance to organic growth and mergers and acquisitions (M&As) this year, he said.

"Although this year is not a big year for us in terms of M&A, we will keep our eyes open for possible takeover opportunities in China," he said.

The company's China sales increased by 15 percent, to around 500 million euros, in 2008, Kraemer said yesterday, adding that the increase was chiefly driven by its rubber business units.

In the first three quarters of 2008, the company's rubber business enjoyed good sales due to strong demand from downstream sectors such as tire manufacturing and shoe making, Kraemer said.

However, it saw a sharp decline in demand in the last quarter of 2008 and the first quarter of this year, he said.

"Lanxess aims to save 250 million euros over the next two years and thereby mitigate the effects of an expected drop in demand," said Kraemer.

The global financial tsunami has hugely impacted the world's chemical industry.

Multinational companies such as Dupont, Dow and BASF have all announced job cuts or postponements in projects to save costs.

According to the China Petroleum and Chemical Industry Association the country's petrochemical industry experienced negative income growth for December 2008, the first decline in 10 years.

However, some analysts have said the economic downturn would not slow down multinational chemical companies' investment into China, as the market is among the few to see business growth.

(China Daily March 20, 2009)