Japan Ethylene Facility Operation Rate Hits Record Low in March

Tokyo, April 23 (Jiji Press)–The operation rate of ethylene production facilities in Japan fell 7.1 percentage points from the previous month to a record low of 68.6 pct in March, the Japan Petrochemical Industry Association said Thursday. The decline came as many petrochemical manufacturers decided to cut ethylene output amid the ongoing Middle East crisis, while some ethylene facilities were shut down for routine maintenance. Of the 12 ethylene facilities nationwide, which produce basic chemicals from petroleum-derived naphtha for products such as plastics and synthetic fibers, four were undergoing regular checkups in March. Meanwhile, operating rates were reduced at six other ethylene facilities due to uncertainty over naphtha procurement amid the de facto closure of the Strait of Hormuz, a key chokepoint for oil shipments. The minimum operating rate required for stable facility operation is estimated to be between 60 pct and 70 pct. The March figure dropped below 70 pct for the first time and represented an all-time low since comparable data became available in 1996. The figure was also lower than the 74.1 pct recorded in March 2009, when global demand was sluggish in the wake of the 2008 Lehman shock, or the global credit turmoil triggered by the year’s collapse of U.S. investment bank Lehman Brothers. The association said domestic demand for petrochemical products is expected to be met for at least the next four months including by drawing on stockpiles of naphtha and naphtha-based intermediates. Each petrochemical manufacturer is working to increase naphtha imports from regions outside the Middle East and is making every effort to ensure stable product supplies, the association added. END [Copyright The Jiji Press, Ltd.]