Japan’s petrochemical industry has seen an upturn in production this year as demand for the country’s high quality chemicals grows at home and in important overseas markets including China and other Asian countries.
Although sales are higher this year, overall domestic demand for petrochemicals is unlikely to grow in future. While chemical producers are not showing any sign of investing in additional capacity, further streamlining of production is expected as petrochemical manufacturers seek tie ups with each other as part of wider efforts by the industry to reduce costs and increase competitiveness.
Following the second half pick up in demand last year, ethylene production in Japan increased slightly to 6.91 million t in 2009 according to Ministry of Economy, Trade and Industry figures, up from 6.88 million t the previous year but still approximately 11% lower than the previous production high of 7.74 million t in 2007.
While domestic demand fell, Japanese chemical exports surged 60% to reach 2.78 million ethylene equivalent with shipments of most derivative products increasing. Most exports were shipped to China where domestic demand for chemicals recovered quickly due partly to growth of the overall domestic market size.
In a bid to cut costs and improve efficiency, a number of companies have started to or are planning to cooperate with each other at locations where they have plants producing the same or similar products. Restructuring has been underway since the late 1990s as the petrochemicals industry has attempted to improve its competitiveness in the face of growing global competition.
Operational integration has also been encouraged between oil refining and petrochemical operations during the past decade as vertical integration also offers important cost savings, such as with transactions involving feedstock and fuel, and cooperation in logistics. The Research Association of Refinery Integration for Group Cooperation was established in 2000 to promote closer cooperation between the refining and petrochemical sectors.
Japanese petrochemical companies continue with efforts to increase their product value through product differentiation and diversification. Dependent on imported feedstock and relatively small scale in size, Japanese petrochemical complexes generally lack cost competitiveness but have succeeded in overcoming this disadvantage by enhancing their product value through diversification and differentiation.
Japan’s petrochemicals industry faces further challenges in adapting operations to meet the government’s target of achieving a 25% decrease in greenhouse gas (GHG) emission by 2020 compared with the rate of GHG emission in 1990. The government has submitted a bill to achieve this target, which will involve introducing various new policies including a carbon emission tax and a cap and trade system.
Petrochemical producers are looking at various ways of meeting the government’s proposed GHG reduction target, which will include improving energy efficiency, such as by using renewable energy to replace fossil fuel, and reducing as well as recovering GHGs.
You can read the full article ‘Bouncing back in Japan’ by David Hayes in the December 2010 issue of Hydrocarbon Engineering.
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/29112010/regional_report_japans_petrochemical_industry/