APIC ’14: Japan expects gradual growth of petrochemical demand

Tahir Ikram

15-May-2014

By Tahir IkramPetrochemical plant

PATTAYA, Thailand (ICIS)–Japan expects a gradual but continuous growth of petrochemical demand in 2014 in the country as a result of slower growth in the world’s largest economies of the US and China, its petrochemical association said on Thursday.

“Due to the ongoing gradual growth of the US and the Chinese economies, and the depreciation of the Japanese yen, we expect that Japanese petrochemical demand in 2014 will also show continuous gradual growth,” Japan Petrochemical Industry Association (JPCA) said.

“It will be a turnaround season in NEA [northeast Asia]  in 2014. Firm olefin demand and reduced output due to turnarounds will enable naphtha crackers to maintain high operating rates while olefin prices stay at a comfortable level,” the association said in its report on Japan’s petrochemical industry.

The report was released to the participants of the annual meeting of Asia Petrochemical Industry Conference (APIC) being held in Pattaya on 15-16 May.

It said construction of new large-scale petrochemical facilities in the Middle East and China and increased reliance on shale gas in North America have forced the Japanese petrochemical industry to strengthen its competitiveness in the global market.

“Thus, the Japanese petrochemical industry needs to implement rationalisation as much as possible under the given conditions, and seek growth markets, especially in Asia,” it added.

JPCA recommended restructuring of the Japanese petrochemical industry that should involve optimisation of domestic crackers; and it listed some of the future plans of a few Japanese majors, which have decided to shut down naphtha crackers.

Mitsubishi Chemical announced that its Kashima No 1 naphtha cracker will be closed in 2014. Sumitomo Chemical will shut its naphtha cracker in Chiba in autumn 2015, and Mitsui Chemicals will withdraw from the Keiyo Ethylene joint venture in Chiba.

In Mizushima, the naphtha crackers of Asahi Kasei Chemicals and Mitsubishi Chemical are scheduled for unification on the Mitsubishi Chemical facility in April 2016, JPCA added.

JPCA suggested that the Japanese petrochemical industry should focus on value-added products through partnership with downstream industries such as automotive, electronics, health care and also to promote environmental friendly technologies.

It also urged the industry to “realise” new opportunities through “petrochemistry”.

“Shale gas is the alternative feedstock for naphtha. Petrochemical production from US shale gas is highly cost competitive, and consequently production from naphtha is poised to decline in the near future,” JPCA said.

“Olefins derived from shale gas and oil, coal-to-olefins, and propane dehydrogenation will accelerate change in the olefins market and petrochemical feedstocks,” it added.

It urged the operators of the remaining Japanese crackers to work to achieve further cost reductions, develop high-value derivatives, develop new technology to convert surplus fractions to propylene, butadiene (BD), and integrate with nearby refineries to enhance their competitiveness.

Referring to the past year, JPCA said the Japanese petrochemical industry showed recovery as compared to its performance in 2012, due to a slight improvement in ethylene demand and increased exports of ethylene and its derivatives as a result of the growth of the Chinese economy and the depreciation of the Japanese yen.

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

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