TOKYO - Japanese chemical giant Toray and Germany's BASF plan to form a joint venture in Malaysia next month to produce a high-performance plastic used in cars and electronic components, a company spokesman said Monday.

"We are considering starting production there in 2006," Toray Industries Inc. public relations official Yoshitaka Yamagata said.

He said details of the projected 50-50 joint venture would be announced at a joint news conference by Toray and BASF executives here on Wednesday.

The leading business daily Nihon Keizai Shimbun said the two leading synthetic fiber makers will produce polybutylene terephthalate (PBT), a climate- and heat-resistant plastic.

BASF AG operates in the Malaysian state of Pahang a plant that produces PBT precursors, the report said.

Demand growing

Toray and BASF plan to build a PBT facility adjacent to that site for an amount limited to about five billion yen (US$47 million), it said.

Production will initially be 60,000 tonnes a year, with the firms equally dividing the output, the report said. If demand increases, they will consider expanding capacity to an annual 100,000 tonnes.

Toray already produces an annual 24,000 tonnes of PBT at its plant in Ehime, southern Japan. But with Asian demand for the material expected to grow by about 10 percent a year, the chemical maker wants to establish an overseas production site, the report said.

Global demand for PBT reached about 500,000 tonnes in 2003, with US maker GE Plastics as the top producer.