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Asahi Kasei to close several petrochemical plants in Japan

11:33 AM MST | February 28, 2014 | —Deepti Ramesh

Asahi Kasei says it will close several petrochemical production plants in Japan and, with Mitsubishi Chemical, is also moving ahead with the previously announced plans to combine their respective naphtha cracker operations at Mizushima, Japan.

Asahi Kasei says it is taking the steps to “cope with contracting domestic demand and price competition from products made overseas based on low-priced feedstock.”

Asahi Kasei says it will close a 150,000-m.t./year acrylonitrile plant at the company’s manufacturing site at Kawasaki by August 2014; a 320,000-m.t./year styrene plant at Mizushima will be closed by March 2016; a 65,000-m.t./year acrylonitrile butadiene styrene (ABS) plant at Mizushima will be closed by December 2015; a 24,000-m.t./year styrene butadiene (SB) latex plant at Mizushima will be closed by the end of 2015; and a 37,000-m.t./year epoxy resin plant at Mizushima will be closed by May 2015.

Asahi Kasei and Mitsubishi Chemical, meanwhile, have completed a feasibility study and signed an agreement to combine their respective naphtha crackers at Mizushima, by April 2016. The two announced the plans in 2010.

The operating climate for the petrochemical business in Japan is expected to become increasingly challenging, Asahi Kasei says. Currently, Mitsubishi Chemical and Asahi Kasei’s Mizushima crackers each have capacity for 500,000 m.t./year of ethylene. The operations will be consolidated at the Mitsubishi Chemical facility at Mizushima, and the unified cracker will have ethylene capacity of 570,000 m.t./year.

For acrylonitrile, Ashai Kasei says demand has fallen because of the slowdown in the Chinese economy and the economic crisis in Europe. The acrylonitrile market is oversupplied with new capacity coming online, particularly in China; the price of propylene feedstock is rising; and margins have deteriorated, Asahi Kasei says.

Besides closing a plant, a 100,000-m.t./year acrylonitrile plant at Mizushima will be converted to produce another product. A 200,000-m.t./year acrylonitrile plant at Mizushima will continue to operate. As a result, Asahi Kasei’s total acrylonitrile production capacity in Japan will decrease from 450,000 m.t./year to 200,000 m.t./year. Asahi Kasei also has acrylonitrile production capacities in South Korea and Thailand.

Asahi Kasei expects oversupply in styrene to worsen with additional capacity expected to come online in China and South Korea. Demand for styrene in Japan was estimated at about 1.4 million m.t. in 2013. Asahi Kasei has a total 710,000 m.t./year styrene capacity in Japan, with two plants at Mizushima. Following the closure of the 320,000-m.t./year plant, Asahi Kasei’s total styrene capacity in Japan will reduce to 390,000 m.t./year, and Japan’s total styrene production capacity will reduce to 2 million m.t./year, Asahi Kasei says. Currently, Asahi Kasei exports a large portion of its 710,000-m.t./year styrene capacity. Following the closure of one of the plants, the company will focus more on supplying the Japanese market, which will alleviate risks, Asahi Kasei says.

Despite firm demand for use in automotive applications, the market in Japan for ABS is contracting because of sluggish demand in other applications, such as electrical and electronic products, Asahi Kasei says. A greater influx of low-priced ABS imports into Japan is expected because of the construction of new plants in Asia. Therefore, cost competitiveness could deteriorate further, Asahi Kasei says. In 2013, about 230,000 m.t. of ABS was sold in Japan and about 130,000 m.t. was exported from Japan, Asahi Kasei says. With the closure of Asahi Kasei’s 65,000-m.t./year ABS plant, Japan’s total ABS capacity will decrease to 670,000 m.t./year.

Demand for SB latex for paper coating, which accounts for 80% of the SB latex market, is contracting, and a further decline in demand is expected, Asahi Kasei says. The price of butadiene feedstock is increasing, and Japanese production of coated paper is declining with the influx of low-priced imported coated paper, Asahi Kasei says. Following the closure of the company’s 24,000-m.t./year SB latex plant at Mizushima, the company will focus production at its 36,000-m.t./year SB latex plant at Kawasaki.

The operating climate is challenging in the epoxy resin business because of oversupply, and the influx of general-purpose epoxy resin into the Japanese market from China, South Korea, and Taiwan is growing, Asahi Kasei says.

The announcement by Asahi Kasei follows Mitsui Chemicals’ announcement in early February about a major restructuring, which will result in the closures of Mitsui’s several production facilities in Japan.

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