Cracker operators in Japan plan to crank up ethylene production this month in anticipation of a pick up in derivative polymer demand during the new fiscal year (April-March), producers and traders said on Wednesday.
“We are planning to increase production in April to 80-90% because polyethylene and polypropylene (PP) operating rates are expected to be raised compared to March,” one producer said.
Among those eyeing the above higher rates included Showa Denko K.K., Mitsui Chemicals, Sumitomo Chemical and Maruzen Petrochemical. The 80-90% target represents up to a 10 percentage point increase from March levels.
Cracker rates in Japan were among the lowest in Asia in the first quarter. Ethylene production levels had hovered at 70-80% in February-March compared with 90-100% in China and South Korea during the same period.
The lower rates in Japan were mainly due to a heavy reliance on weak domestic demand particularly from the automotive industry – a key growth engine for the world’s second-largest economy.
Car sales worldwide had plummeted with the onset of the global economic downturn in late 2008 as consumers tightened their belts. This in turn had affected demand for petrochemicals such as co-polymer polypropylene, which is an important plastic for car parts.
Japan’s automotive production shrank for the fifth consecutive month in February, sliding 56.2% year-on-year to 481,396 units, reflecting sharp declines in the output of standard and small passenger cars, according to statistics from the Japan Automobile Manufacturers Association (JAMA).