INSIGHT: Japan’s chemicals production and exports hit

15 March 2011 17:34  [Source: ICIS news]

By Nigel Davis

DUBAI (ICIS)--For some, life goes on. For others, everything is lost.

An email to the BBC on Tuesday from a resident in Mie, Japan, 350 miles from the stricken nuclear power plants on the east coast of the country, described a relatively normal day.

Utilities are available but people are feeling nervous and there is some stockpiling. “It feels as if there are two Japans at the moment,” the correspondent, John Stephenson, said.

So, one question among so many at this particularly difficult time is: how are the two Japans coping, indeed surviving, in the face of such adversity?

The impact of the earthquake and tsunami on Friday 11 March, and now the aftershocks, can still only slowly be pieced together.

The world’s eyes are on the damaged nuclear reactors. But the Nikkei stock market index had crashed by 10% at the close on Tuesday, reflecting the sharply negative economic outlook. Oil prices plunged.

Assessing the impact of the disaster on the petrochemical industry, and on regional markets, so far is difficult to say the least, although some headway is being made.

Reports suggest that important crackers and other production units are not operating.

We know for certain that ethylene and aromatics production is hit. ICIS has reported the closure of ethylene, benzene, paraxylene (PX), propylene oxide, propylene glycol, polyvinyl chloride, titanium dioxide and polyether polyols plants, and reduced output at others. It could take weeks or months for these units to come back on stream.

Paraxylene prices have climbed following a supply force majeure announcement by the world’s largest PX exporter, JX Nippon Oil.

Three of its PX plants, with a combined capacity of 950,000 tonnes a year, located in the devastated Miyagi prefecture, are shut down.

Five refineries have shut down in Japan - a Cosmo oil refinery continues to burn - and port activities have been disrupted, putting further strain on foreign trade.

But many plants are operating normally, and others that shut down automatically as a precaution might be expected to restart soon.

However, the damage caused by the disaster is unimaginable, as is the hardship being suffered by so many people.

Production plants have closed automatically, while chemical company offices have been closed, giving staff time to come to terms with recent events.

According to reports, all of Japan’s 12 automobile makers closed their assembly lines, for the first time ever. Some of them will not reopen until Wednesday.

Japan’s chemical industry has been dealt a severe blow from which it will no doubt recover, but that recovery will take time.

For some in this business, life goes on as normal, but for others the disruptions to production capability and to trade will take time to come to terms with.

By: Nigel Davis
+44 20 8652 3214

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