JAPAN DISASTER: Producers 'might have to declare capro FM'

16 March 2011 13:10  [Source: ICIS news]

SINGAPORE (ICIS)--Japanese producers might have to declare force majeure (FM) on caprolactam (capro) due to possible feedstock and power shortages, a northeast Asian capro producer said on Wednesday.

Following last week’s earthquake and tsunami, Japan’s facilities - though structurally sound - face acute power shortages and a shortage of feedstock cyclohexane (CX), which could lead to shutdowns or reduced operating rates.

"We cannot rule [out] the possibility that most major caprolactam plants in Japan might need to declare FM this week," he said.

"It is difficult to predict the future situation," he added.

There were fears of a shortage of one of caprolactam's key feedstocks, CX.

However, some industry sources disagreed with the idea that producers might declare FM.

"It's not really in [the] Japanese business culture to declare FM just because of [a] feedstock shortage," said one major trader.

The most amicable way to resolve the problem would be to defer monthly allocated volumes for the next few months and make up for them once production was back on track.

"Taiwan’s bulk buyers would definitely be informed first [should FM be declared]," the source added.

Taiwan is Japan’s key caprolactam export destination, taking up more than more than two-thirds of the country’s annual 200,000 tonnes of exports. Most of the rest goes to China.

Japan’s four caprolactam producers - Ube Industries, Sumitomo Chemical, Toray Industries Inc and Mitsubishi Chemical Corp (MCC) - have a combined capacity of 525,000 tonnes/year. The companies’ plants are located far from the epicentre of the quake and were unaffected by it.

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By: Junie Lin

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