Shin-Etsu Chemical Co., Ltd. (President: Chihiro Kanagawa; Head Office: Tokyo) announced that about April 2009 it will start manufacturing pharmaceutical-use methylcellulose (MC) at SE Tylose GmbH & Co. KG, its Group company in Wiesbaden,Germany. With this increase in production capability in Germany, together with Shin-Etsu Chemical’s Naoetsu Plant (in Joetsu City, Niigata Prefecture) cellulose manufacturing facilities, Shin-Etsu will have in place multiple production bases for pharmaceutical–use methylcellulose. At the same time, the Naoetsu Plant will also expand its production capacity of pharmaceutical-use methylcellulose by October 2008.

SE Tylose will also expand its production capacity of methylcellulose used for building materials. Combined with the new construction of pharmaceutical–use methylcellulose manufacturing facilities, the company’s production capacity of methylcellulose will increase by about 10,000 tons per year, and SE Tylose’s total annual production will become about 50,000 tons. The total investment amount required for these production expansions in Germany and Japan is expected to be about ¥30 billion.

On March 20, an explosion-fire accident occurred at a cellulose manufacturing facility of Shin-Etsu Chemical’s Naoetsu Plant, resulting in the cessation of operations of all of the Naoetsu Plant’s cellulose manufacturing facilities. Although all manufacturing facilities, excluding the MC-II factory where the explosion occurred, have sequentially restarted operations from the latter half of May, the period of stoppage has resulted in causing great inconveniences to our customers and to others related to this business.

SE Tylose has been manufacturing methylcellulose for building materials; however, so far SE Tylose has not been manufacturing pharmaceutical–use methylcellulose. In view of the effects on the cellulose business of the Naoetsu Plant accident, to assure stable supply of methylcellulose, Shin-Etsu decided to start the manufacturing of pharmaceutical–use methylcellulose at SE Tylose as well.

Furthermore, at the Naoetsu Plant, in order to meet vigorous demand, Shin-Etsu will expand its pharmaceutical–use methylcellulose production capacity at its existing plants within its Naoetsu Plant. With these new expansions of production capacity in both Germany and Japan, Shin-Etsu Chemical’s total production capacity of methylcellulose will become about 70,000 tons per year.

Cellulose derivatives are water-soluble polymers whose principle raw material is pulp. Methylcellulose has a wide diversity of applications, mainly in such areas as building and construction materials, pharmaceuticals and toiletries as well as in food products. The Shin-Etsu Group presently holds the world’s top share in MC pharmaceutical uses and also maintains a top-class world market share for building and construction applications.

With these planned expansions, Shin-Etsu will strive to assure stable supply and strengthen its global market position in all of these application fields. At the same time, Shin-Etsu will pursue other applications that will make good use of the merits of its bipolar production system, as Shin-Etsu aims to expand its global market share in cellulose-derivative products.