Corrected: JAPAN DISASTER: Polyolefins capacity down

Correction: In the ICIS story headlined “JAPAN DISASTER: Polyolefins capacity down by at least 25%” dated 17 March 2011, please read in the table Japan Polypropylene PP plant’s capacity in Kashima at 646,000 tonnes/year instead of 346,000 tonnes/year. The producer’s PP plant in Yokkaichi capacity as 80,000 tonnes/year instead of 227,000 tonnes/year. A corrected story follows.

SINGAPORE (ICIS)–Japan’s polyolefins industry has incurred significant production losses in linear low-density polyethylene (LLDPE), as a number of plants remain shut in the wake of the 11 March earthquake, industry sources said.

An estimated 660,000 tonnes/year or more than half of Japan’s total 1.06m tonnes/year LLDPE capacity remain shut as a result of the earthquake, according to local company data (see table below).

Meanwhile, about 477,000 tonnes/year of low-density PE (LDPE) and 233,000 tonnes/year of high-density PE (HDPE) capacity remain shut, accounting for about 42% and 26% of total capacity, local company data showed.

Japan’s total LDPE and HDPE capacity is estimated at around 964,000 tonnes/year and 904,000 tonnes/year, respectively, according to the data.

Around 1.03m tonnes/year of polypropylene (PP) capacity has been shut in Japan, accounting for about 32% of its total capacity at 3.18m tonnes/year, the data showed.

Reduced PE and PP production in Japan has not triggered many import enquiries as the extent of the resin supply shortage is unclear, regional producers said.

“We sold more than 500 tonnes of LLDPE this week for end-March/early April shipment to Japan, but we’ve not heard of any large volume transactions this week,” an Asian PE producer said.

“Reports on the production status in Japan are all different, so nobody is sure what’s the actual situation,” he added, referring to media reports as well as feedback from regional trading houses.

The lack of enquiries for shipment to Japan was also attributed to uncertainty surrounding the demand situation there, two Asian resin producers said.

“PP supply has been cut but local demand has also come down. We don’t know what’s the supply balance yet,” an Asian PP producer said.

One producer said that power shortages have reduced the operating rates in the domestic plastics processing sector.

“Some plastics processors in the east have either reduced or stopped operations because of power shortages. But we’re not sure about total demand,” the PE producer in Japan said.

But demand for plastic packaging material and components in Japan was expected to weaken if power shortages were not alleviated, as many downstream sectors such as electronics and electrical appliances, and automotives have cut or reduced production because of a shortage of electricity, a global PE producer said.

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