Japanese Petrochemicals Crisis Big in Japan? Plant Closures threaten Petrochemical Industry
Japan — the Country of the Rising Sun? For the petrochemical industry, this is a thing of the past. While China is boasting with huge downstream projects, Japan is discussing plant closures and consolidations. Only cooperations could stop the downward trend, industry insiders believe.
Japan’s petrochemical industry is fallen on hard times. No, it’s not as if Godzilla stomping through the country’s refineries, but the problems can’t be ignored. With a stagnating economy and declining demands, the branch is overdue for capacity adjustments, some insiders say.
These adjustments, could in fact demand much of the country’s crisis ridden economy: Recent plans show that across all companies, some 560,000 tons of petrochemical production capacity could be idled in Japan. An additional 100,000 tons of plant capacity will be dedicated to other products. These plans affect basically all businesses, from acrylonitrile via styrene and latex to ABS.
Plant Closures Ahead
The industry hopes to reduce fix costs by plant closures and to achieve higher operating rates at the remaining sites. A concentration on several crisis-proof core businesses shall help to reduce the dependency on export markets. But this focusing is more easily said than done, as petrochemical value chains are diverse and stretch across a wide variety of cracker products.
Especially acrylonitrile (AN) has become a problem child for Japan’s refiners and petrochemical specialists: This important monomer and plastics precursor is facing low demands due to a slowdown in the Chinese economy and the economic crisis in Europe.
Now with several big plant construction and expansion projects underway in China and rising market prices for propylene, the basic AN feedstock, the market is becoming increasingly difficult. Japan, on the other hand, has currently installed 450,000 tons/year production capacity for AN. Yet not all of these plants are operating profitable.