Japanese petrochemicals forced to consolidate as country slips into recession

Petrochemical plant
Source: DollarPhotoClub

As Japanese economy slips back into recession, the country’s petrochemical industry is struggling to keep up with competition. Those members of the petrochemical industry who have managed to capitalise on the North American shale boom, are benefiting from low-priced feedstocks, which allows them to increase efficiencies and bring production cost down.

In this adverse climate, Japanese Ministry of Economy has issued a report calling for the industry to consolidate facilities and restructure businesses.

In many instances the process has already started. Sumitomo Chemical shut down its cracker in Chiba in the second half of next year, while the crackers of Asahi Kasei Chemicals and Mitsubishi Chemical are due for unification in April 2016.

According to the portal ICIS, Japan’s petrochemical industry might have to shut down some of the domestic operations, while following other big players like BASF in building plants abroad to gain access to cheaper feedstocks. Japan’s refining industry might also see further consolidation in response to increased production capacity in the Middle East and Asia.

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