Tosoh, a Japanese chemical maker, said that it may invest as much as ¥50 billion, or $460 million, to build plants in Japan and China.

The Tokyo-based petrochemical maker may produce polyvinyl chloride in China using materials made in Japan, said Teruichiro Kobayashi, a company spokesman. Tosoh has not made an official decision on the plan, he said.

Demand for polyvinyl chloride for use in construction and other materials has been expanding in China, where the economy grew 9.7 per cent in the first quarter from a year earlier. Power shortages in China make it difficult for Tosoh to produce the chemical's components there, Kobayashi said.

"It's positive that Tosoh is focusing on polyvinyl chloride, its core business," said Shuichi Nishimura, an analyst at Nomura Securities.

Shares of Tosoh surged on news of the plan, rising by as much as 8 per cent to ¥417 on the Tokyo stock exchange. The shares later pared gains to close 1.8 per cent lower at ¥379 after the company announced preliminary earnings for the year ended March 31 that fell short of its forecast.

Tosoh will build a factory jointly with Mitsubishi in China, the Nihon Keizai said. In Japan, the company will build a plant in the southwestern prefecture of Yamaguchi capable of producing 600,000 tons of vinyl chloride monomer a year, the paper said. That would raise the company's monomer production capacity by 56 per cent.

- Bloomberg News