[Ocean Chemical News] Analysis of Japan's petrochemical industry (with summary of Japanese refineries)

Since the global financial crisis in 2008, Japan's petrochemical industry has been in a downturn. However, with the weakening of the yen and the sharp fall in international crude oil prices in recent years, its petrochemical industry has gradually recovered and its competitiveness has continued to improve. According to Japanese industry insiders, Japan's petrochemical industry is entering a period of prosperity. Device operating rate rebounds In order to enhance competitiveness, the Japanese petrochemical industry has adopted a series of structural adjustment measures, including mothballing multiple naphtha cracking units and derivatives plants, and repositioning domestic production capacity to cope with declining domestic demand. Today, the operating rate of domestic petrochemical plants in Japan has rebounded. In 2016, the average operating rate of Japan's naphtha crackers reached 96.2%, the highest level since the 2008 economic crisis. With the slow recovery of the economy, especially the 32nd Summer Olympics held in Tokyo in 2020, it is expected to drive continued growth in market demand. Demand for derivatives and polyolefins in Japan has remained strong, and in recent years, the ethylene cracking utilization rate has been over 90%. Increased industry competitiveness It is generally believed in Japan that the competitiveness of the petrochemical industry has significantly improved due to business restructuring and that it is able to cope with market changes. In terms of naphtha cracking units, Mitsubishi Chemical, Sumitomo Chemical, and Asahi Kasei Chemical have closed some naphtha cracking units. Statistics show that in the past three years, restructuring has reduced Japan's ethylene production capacity to 6.1 million tons/year. Thanks to the restructuring, Japanese petrochemical producers can calmly cope with competition from China, South Korea and Thailand, and can also compete with US petrochemical producers who have the advantage of shale raw materials. Japan relies on imported petrochemical raw materials, and energy costs are higher than those of neighboring countries. Therefore, Japanese petrochemical companies could not win through product price competition, so they stopped the production of low-value general-purpose derivatives and naphtha cracking. In addition, Japanese petrochemical companies are also working hard to develop high-performance, high value-added products to meet the Japanese domestic and export markets. Competition in the polypropylene (PP) industry has become increasingly fierce as multiple sets of propane dehydrogenation (PDH) plants in Asia have been put into operation to increase propylene production. To this end, Japan has announced multiple PP plans to demolish old and build new ones to update production facilities and create better profit conditions. Japan Polypropylene, a subsidiary of Mitsubishi Chemical, plans to build a 150,000-ton/year PP unit at its Goi plant in Chiba Prefecture by the end of 2019. Japan's Prime Polymer, a joint venture between Mitsui Chemicals and Idemitsu Kosan, plans to put its new Chiba PP plant into operation around 2020. Japanese domestic chemical companies are also taking similar measures in the polyvinyl chloride (PVC) industry. Tosoh subsidiary Taiyo Vinyl Co., Ltd. plans to dismantle its old factory in Yokkaichi and build a new one from 2018 to 2022. In fact, due to the decline in naphtha prices, the competitiveness of Japanese vinyl PVC resin has improved a lot compared to China's calcium carbide process PVC. Therefore, Japanese manufacturers continue to expand into Asian markets outside China, especially India. In addition, some Japanese companies also plan to improve the competitiveness of naphtha cracking units while reorganizing their derivatives business, mainly to increase the flexibility of raw materials. Japan's ethylene cracking used to mainly use naphtha as raw material, but more and more ethylene plants are able to use LPG, ethane, propane and butane as raw materials through raw material diversification. They can also switch raw materials based on market prices and supply and demand trends. Building three major clusters Representatives at the meeting pointed out that the Japanese petrochemical industry has improved its competitiveness through restructuring and other measures, and new ideas in the future will involve broader cooperation. There are currently eight locations in Japan with naphtha crackers and refineries - Kashima City in Ibaraki Prefecture, Chiba City in Chiba Prefecture, Kawasaki City in Kanai Prefecture, Yokkaichi in Mie Prefecture, Sakai City in Osaka Prefecture, Mizushima in Okayama Prefecture, Shunan in Yamaguchi Prefecture and Oita City in Oita Prefecture. The new idea for the Japanese petrochemical industry is to combine eight production sites into three major clusters through broader cooperation, namely the Tokyo area plus Kashima, Ise Bay and the Seto Inland Sea. The main goal of the broader collaboration is to integrate product distribution management. So far, Japanese petrochemical companies are still selling their products independently. The future goal is to establish a large-scale export/import base, encourage cooperation in raw material procurement and export sales, and further enhance the competitiveness of the petrochemical industry.

List of Japanese oil refining companies (10,000 tons/year) No. Company name Crude oil processing capacity 1JX Energy (Mizushima) 1941.8 2JX Energy (Maribu) 649 3JX Energy (Oita) 695 4JX Energy (Sendai) 741 5 Kashima Oil (Kashima) 1290.3 6 Toen General Oil (Chiba) 776.7 7 Toen General Petroleum (Kawasaki) 1318.4 8JX Energy (Negishi) 1369.5 9 Toen General Petroleum (Sakai) 797.2 10 Osaka International Petroleum Refinery (Osaka) 587.7 11 Toen General Petroleum (Wakayama) 674.5 12 Seibu Petroleum (Yamaguchi) 613.2 13 Idemitsu Kosan (Hokkaido) 817.6 14 Idemitsu Kosan (Chiba) 1022 15 Fuji Oil (Sodegaura) 730.7 16 East Asia Oil (Keihin) 357.7 17 Idemitsu Kosan (Aichi) 894.3 18 Showa Yokkaichi (Yokaichi) 1303.1 19COSMO (Chiba) 1124.2 20COSMO (Yonkaichi) 674.5 21COSMO (Sakai) 511 22 Nansei Oil (Nishihara) 511 23 Taiyo Oil (Shikoku) 603 Total crude oil processing capacity 20003.4