JAPAN DISASTER: Benzene monthly supply to fall by 10%

24 March 2011 07:43  [Source: ICIS news]

By Mahua Chakravarty

Japan benzene supply to fall by 10%SINGAPORE (ICIS)--Japan’s monthly benzene supply is expected to fall by about 10% following a spate of shutdowns and the diversion of aromatics to gasoline blending in the wake of the 11 March earthquake, Japanese industry sources said on Thursday.

Spot prices of benzene were hovering $5/tonne lower from Wednesday at $1,150-1,160/tonne (€813-824/tonne) FOB Korea on Thursday on poor downstream styrene monomer (SM) conditions. This week's market has calmed down after a flurry of benzene deals last week because of sudden demand from quake-hit Japan.

The estimated loss of Japan’s benzene production stands at about 40,000 tonnes/month at the moment and Japanese traders had purchased cargoes from South Korea in the past week, said a Japanese benzene trader.

But the initial estimate about the loss of production was at about 100,000 tonnes/month as a result of plant shutdowns immediately after the disaster hit Japan, he added. This estimate was revised following the start up of some plants, the trader said.

Following the quake, JX Nippon Oil & Energy, Maruzen and Mitsubishi Chemical had shut down their plants in locations such as Sendai, Kawasaki, Chiba and Kashima, Japanese sources said (see table below).

JX Nippon Oil has restarted its Negishi-based 165,000 tonne/year benzene reformer and plans to restart its Kawasaki-based 110,000 tonne/year benzene unit this week, the trader said.

The company’s 170,000 tonnes/year benzene reformer unit in Sendai, which is located near the epicentre of the quake, remains shut. A third 190,000 tonnes/year plant in Kashima, which includes a reformer and a toluene disproportionation (TDP) unit, also remains shut, with no details on when it would be restarted.

Idemitsu Kosan’s 327,000 tonne/year plant in Chiba and 219,000 tonne/year plant in Tokuyama were not affected by the earthquake. However, the company is expected to take its Chiba unit off line from 27 March to 19 May for scheduled maintenance.

Maruzen could restart its Chiba-based 200,000 tonne/year benzene reformer in the next one to two weeks, the Japanese trader said.

But it remains uncertain when the Kashima-based plant run by Mitsubishi Chemical would recommence production, as the area was badly-hit, the trader said. No confirmation was available from the company.

Japan usually produces about 4.8 million tonnes/year of benzene for domestic consumption and exports.

Meanwhile, benzene supply will fall because Japanese refiners were obligated to channel aromatics into the gasoline pool to ease fuel shortages in the country, said a Japanese producer and a trader.

“Japanese suppliers are now checking their aromatics and petroleum balance,” a third source said.

A company source from JX Nippon Oil & Energy Corp said it would be cutting aromatics supply from its TDP and hydrodealkylation (HDA) plants and instead using supplies for gasoline blending.

Another producer said: “We [the companies without refineries] have no obligation to supply aromatics for gasoline production. The companies that have refineries need to do that.”

Some of the key aromatics producers that have refiners in Japan are JX Nippon Oil & Energy, Idemitsu Kosan and Taiyo Oil.

Japan has been scrambling for fuel supplies after about 22% of its refining capacity was shut down and as about one-fifth of its nuclear reactors were disrupted following the quake.

Gasoline has also been in demand for emergency vehicles and to facilitate transport into areas affected by the earthquake and tsunami, further worsening the energy crunch.

Japan is a major producer and supplier of benzene, toluene and mixed xylenes in Asia. The country also widely uses toluene and mixed xylenes as octane boosters for gasoline blending.

Plants

Location

Benzene (tonnes/year)

Processes

Status

Maruzen

Chiba 1

130,000

HDA

Running at 50%

Maruzen

Chiba 2

200,000

Reformer

Shut

Mitsui Chemicals

Chiba

130,000

Cracker

Running, to be confirmed (TBC)

Mitsubishi Chemical

Kashima 1

200,000

Cracker

Shut after quake, TBC

Mitsubishi Chemical

Kashima 2

370,000

Cracker

Shut after quake, TBC

Mitsubishi Chemical

Mizushima

200,000

Cracker

Running

JX Nippon Oil & Energy

Sendai

170,000

Reformer

Shut

JX Nippon Oil & Energy

Kashima

190,000

Reformer

Shut

JX Nippon Oil & Energy

Kawasaki

110,000

Cracker

To be restarted this week

JX Nippon Oil & Energy

Negishi

165,000

Reformer

Restarted (market sources)

Sumitomo Chemical

Chiba

150,000

Cracker

Running, TBC

Taiyo Oil

Kikuma

450,000

Cracker

Running, TBC

Idemitsu Kosan

Chiba

327,000

Cracker

To be shut for turnaround from 27 March

Idemitsu Kosan

Tokuyama

219,000

Cracker

Running

($1 = €0.71)

Click here for the latest news on the Japan disaster


By: Mahua Chakravarty
+65 6780 4359



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