GS Caltex, South Korea’s second-largest oil refiner, said Tuesday it has established a new office in Monterrey, Mexico, to oversee its forthcoming plastic compounding business in the country.

As the first Korean company to do so, GS Caltex Mexico S.R.L. plans to build a plastic compounding plant near Monterrey this year.

The plant is set to begin operations in 2017 with an annual production capacity of 30,000 tons, which will be expanded to 50,000 tons by 2020.

“The opening of a Mexican office marks a significant milestone in GS Caltex’s push to enter North America,” considered one of the world’s top three markets for plastic compounds alongside Europe and China, said a GS official.

The refiner currently operates three compounding plants in Korea, two in China and one in the Czech Republic, which together boast a net capacity of 240,000 tons. The scheduled expansion of its existing plants and the upcoming Mexican plant will drive up the firm’s production up to 360,000 tons by 2020, GS Caltex said.

Plastic compounding refers to diverse chemical formulations made by blending polymers such as polypropylene and polyaramid with additives like glass fiber, carbon fibers, talc as well as stabilizers to strengthen the material.

These plastics draw high demand globally as they are used in building vehicles as well as diverse home appliances including washing machines and air conditioners.

GS Caltex manufactures and sells plastic compounds tailored for diverse purposes under the brand name Hiprene. It currently produces fiber reinforced thermoplastics for diverse automotive parts including the panorama sunroof frame, crash pad and air bag.

Around 2,000 tons of the company’s sunroof frame FRT, which won the SPE Automotive Innovation Award in the U.S. in 2014, has been supplied to some 400,000 vehicles including the Kia Sorrento as of 2015, according to GS Caltex.

By Sohn Ji-young (jys@heraldcorp.com)