China XD Plastics, which primarily supplies the auto industry, plans to increase annual production capacity of modified plastics from 100,000 tonnes in 2010 to approximately 135,000 tonnes in 2011 by purchasing up to nine new production lines.

The supplier expects installation and testing to be completed by the end of 2010 and to be fully operational next January.

The company will retrofit its factory in Harbin to house the new production lines. It said the new equipment will allow it to meet its target of increasing production capacity by approximately 35,000 metric tons of high-end products once the facility refurbishment and new product installations have been completed. It is expected that the total cost will be approximately CNY130m (US$20m)- CNY100m for new equipment and CNY30m for facility retrofitting.

China XD Plastics said the Chinese auto industry was continuing to grow at a rapid rate with sales of 11.57m units in the first eight months of 2010, up 39% year on year.

"Driven by the increasing auto demand and plastic content on a per vehicle basis, the company believes that the demand for automotive modified plastics in China will continue to grow in the future. The company is therefore committed to considering additional opportunities to increase its production capacity to meet the needs of customers and benefit from the rapid market growth," it said in a statement.

Chairman and CEO Jie Han said: "Upon the completion of this expansion, we believe we will be in a better position to meet our customers' increasing demand for our products, enhance our production capacity for high value-added products, further optimise our product mix and increase the overall gross margin of the company's products."