ICI in joint venture talks with Japanese chemical companies: Agreements may involve takeover of supply

IMPERIAL Chemical Industries is in the early stages of joint venture talks with two Japanese chemical groups.

The company yesterday confirmed weekend reports of discussions. If successful, the deals would mark a significant increase in ICI's Japanese presence.

ICI operates five joint ventures in Japan. A new plant, jointly owned with Teijin, produces 'Klea', the CFC replacement.

The company declined to reveal details of the deals under discussion. There is speculation that they may involve ICI taking over the supply of chemicals now produced by uneconomic Japanese plants, which could close.

The rise in the yen this year has forced Japanese buyers of chemicals to look offshore for their needs rather than purchase from domestic producers.

In local currency terms, ICI is a relatively low-cost producer. Any deals would help ICI to penetrate more deeply the Japanese domestic market, which provides the bulk of Japanese chemical sales.

ICI has identified the Far East as a priority for future expansion of the company in the wake of the demerger of Zeneca, its former pharmaceuticals and agro-chemicals operation.

ICI has also been reordering its portfolio of chemical interests. It swapped its European nylon fibres activities for the US acrylics interests of Du Pont to establish itself as a world leader in that segment of the market.

On Thursday, ICI will report its half-year results. Estimates of profits range from pounds 110m to pounds 130m for the six months, compared with pounds 96m in the comparable half. Most analysts expect a maintained interim dividend of 10.5p.

Prices for key ICI chemicals have been rising. This has added momentum to the upturn in demand apparent in the US and UK by encouraging chemical buyers to build up stocks ahead of any continued trend towards higher prices.