(Yicai) Jan. 19 -- Chinese nylon supplier Shenma Industry said it will invest CNY252 million (USD35 million) to build a yarn factory in Thailand to side-step international trade barriers and better meet demand from overseas tire makers.

The plant will be located in an industrial park in Thailand's Eastern Economic Corridor and make 20 kilotons of nylon a year, Pingdingshan-based Shenma said late yesterday. Two kinds of nylon yarn will be produced in the first phase, with combined annual capacity of 10 kt and a construction period of 15 months, it added.

The project will likely bring annual revenue of CNY317 million and a profit of CNY59.1 million (USD8.2 million), with an estimated payback period of around seven years, the company noted, citing the project's feasibility report.

Shenma will use nylon chips from its factories in China as raw materials at the Thai plant, it said, noting that the products will be made mainly for local tire makers and exports to North America.

The project will allow Shenma to effectively avoid and resolve the trade barriers its products meet in the United States and Europe, according to the company. In addition, Thailand is developing into a production hub for Chinese and global car tire makers, it noted. 

Building a raw material production base in Thailand will more effectively meet the needs of downstream customers and reduce the cost of sales, Shenma pointed out.

Shenma, one of China's leading suppliers of nylon yarn and related products, has an annual production capacity of 162,000 tons. Its customers include well-known tire producers such as France's Michelin, Japan's Bridgestone, and US Goodyear Tire and Rubber.

Shenma's shares [SHA: 600810] fell 0.1 percent to end at CNY6.92 (97 US cents) apiece in Shanghai today.

Editor: Martin Kadiev