The Japanese firm Mitsubishi has confirmed it is planning to build a new petrochemical plant in China that will produce purified terephthalic acid (PTA).

An agreement with the Itochu firm will see the company aim to exploit a rise in demand for synthetic fibres and other packaging materials in China and South East Asia.

PTA, which is usually produced using a palladium catalyst, is the favoured raw material in the making of the polythylene terephthalate polymer. This is used in the manufacturing of goods such as textiles, packaging and film products.

Under the terms of the agreement the two firms will build a PTA plant capable of producing 600,000 metric tons a year in the Zhejiang Province of China.

Dow Jones reports that total investment in the plant will top $300 million, following a number of similar facilities in the region.

Last week Mitsui Chemicals unveiled plans to construct a 600,000 ton PTA plant in China.  The company also reported that PTA demand in Asia has grown at an average annual growth rate of 11% over the past five years, from 8 million tonnes in 1998 to 20 million tonnes in 2003.