Japan's largest chemical company Mitsubishi Chemical Holdings and Asahi Kasei, which will start up a joint venture company to unify their cracker operations at Mizushima on April 1, 2011.
The companies will adjust their capacities downward by 2012 based on an expected 30% decrease in ethylene demand, and eventually concentrate on a single naphtha cracker. Right now, both companies have their own crackers - each with 500,000 tonnes/year of ethylene capacity. These are relatively old crackers, with Mitsubishi's built in 1964 and Asahi Kasei's in 1965.
The cracker consolidation move is in response to "declining domestic demand, expansion of large-scale production facilities in the Middle East and increasing supply capacity in China," according to the companies.
Many of Japan's older crackers simply cannot compete with facilities based on advantaged feedstocks in the Middle East and new, larger plants in China that are at the epicenter of an explosion in demand.
Japan's crackers will increasingly serve their domestic market, as exports face greater competition from Middle East product and China's growing capacity.
Ryota Hamamoto, Japanese chemical industry veteran and now senior executive adviser at consultancy Accenture Japan, predicts that 3-5 less competitive crackers comprising 1.5-2m tonnes of ethylene capacity could be shut down in the next 5-6 years (see page 35).
On October 1, the cracker operations of Mitsui Chemicals and Idemitsu Kosan at Chiba started operating under one joint venture called Chiba Chemical Manufacturing. Mitsui's cracker at the site has 553,000 tonnes/year of ethylene capacity while Idemitsu's cracker has 374,000 tonnes/year of ethylene capacity. This also points to capacity consolidation, as the companies will explore "raw material options, production optimization, and added value components to form an ethylene center with top level of competitiveness in Japan."
These bold and necessary moves are taking place at the same time companies boost their capabilities in specialty chemicals and polymers, and key intermediates.
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