Corrected: APIC '13: Japan needs to restructure ops to remain competitive

09 May 2013 02:45  [Source: ICIS news]

Correction: In the ICIS news story headlined "APIC '13: Japan needs to restructure ops to remain competitive" dated 9 May 2013, please read in the sixth paragraph ... naphtha cracker in Chiba ... instead of ... naphtha cracker in China .... A corrected story follows.

TAIPEI (ICIS)--Japanese petrochemical firms will need to continue to optimise and restructure their production capabilities and integrate their operations with domestic refiners in order to remain competitive, the Japan Chemical Industry Association (JPCA) said on Thursday.

"Construction of new large-scale petrochemical facilities in the Middle East and China and increased reliance on shale gas in North America have forced Japanese petrochemical industry to undertake sweeping fundamental reforms to strengthen its competitiveness in the global market," it said in a report.

"One of the important imminent tasks is optimisation of its domestic crackers," it said.

The report was published for the annual Asian Petrochemical Industry Conference (APIC) which runs from 9-10 May in Taipei, Taiwan.

Steam cracker operators Mitsui and Idemitsu are studying the possibility of integrating their operations in Chiba, while Mitsubishi and Asahi are doing the same for their facilities in Mizushima, according to the JPCA.

Mitsubishi has also announced that its Kashima No 1 cracker will be closed in 2014, while Sumitomo Chemical will shut its naphtha cracker in Chiba in autumn 2015. Mitsui Chemicals, meanwhile, has announced that it will withdraw from the Keiyo Ethylene Co joint venture in Chiba, it said.

The JPCA added that the domestic petrochemical industry lacks cost competitiveness because each complex in Japan is relatively small in scale and dependent on feedstock imports.

The domestic petrochemical industry should continue to produce high performance products in partnership with downstream industries such as the automotive, electronics, eco-products and healthcare sectors, it said.

"Chemical companies and downstream industries need to integrate more the technologies, markets and products in order to generate new markets," it added.

Meanwhile, the JPCA said that the Japanese petrochemical industry will likely see a gradual recovery this year on the back of the recovery of the US and Chinese economies as well as the depreciation of the Japanese yen.

"The continuation of the Tohoku [earthquake] reconstruction and the large-scale supplementary budget will push the domestic demand," it said.

"Some downside risks are European sovereign debt crisis when it becomes more serious, the increase of the consumption tax, further import increase in ethylene and its derivative products, a rise in crude oil and raw material prices and constraints of electric power supply," the JPCA added.

By: Nurluqman Suratman

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