Hanoi (Platts)--18Feb2011/149 am EST/649 GMT

Petrochemical and Textile Fiber Joint Stock Co., or PVTex, will start operations at its $325 million Dinh Vu polyester synthetic fiber plant in the northern city of Hai Phong from August 23 this year, a company representative told Platts late Thursday.

The plant will produce about 500 mt/day of PSF, or about 175,000 mt/year, which represents about 40% of the country's demand. The Vietnam National Textile and Garment Group has committed via a long-term contract to buy around 100,000 mt/year of PSF from the plant, taking about 60% of the plant's capacity.

PVTex has yet to determine the suppliers for the PTA and MEG feedstocks required for the Dinh Vu facility.

"PVTex is urgently in the process of selecting feedstock suppliers among interested contractors for the plant. We will announce the winners once there is a final result," the representative said.

He declined to identify any of the potential suppliers or from which countries the feedstock might come.

The company, however, says on its website that in July and August 2008 it had signed tentative agreements with four potential foreign suppliers, including Thai Siam Mitsui PTA Co., and three Japanese companies Marubeni, Mitsubishi and Sojitz.

"The main objective of the plant is to use the petrochemical products supplied by PetroVietnam as the feedstocks to produce polyester fibre for local textile and garment industry," he said.

Each year, Vietnam has to import around 400,000 mt of PSF at a cost of $400 million-$500 million for its textile and garment industry, according to reports in the local press.

A consortium comprising South Korea's Hyundai Engineering and LG International, along with PetroVietnam Construction Corporation, began constructing the plant in July 2009.

PetroVietnam and two of its subsidiaries account for 81% of the plant's ownership, with state-owned Vietnam National Textile and Garment Group holding 14% and local company Phongphu Textile Corporation JSC 5%. The Dinh Vu plant is expected to generate $300 million in revenue each year.

--Dao Dang Toan, newsdesk@platts.com

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