Japan's ethylene plant capacity at over 100% in January 2017

17-Feb-17

Japanese facilities that produce basic petrochemicals like ethylene operated at 100.1% capacity in January, the Japan Petrochemical Industry Association announced, exceeding full utilization for the first time since February 2008, as reported by asia.nikkei.com. The monthly utilization rate is calculated based on the plants' output capacity as reported to the Ministry of Economy, Trade and Industry, and their actual production. The figure topped 100% "because companies ran their facilities at full capacity and produced more ethylene than they officially said they can," a representative from the association said.
The utilization rate increased for the fifth straight month in January, a clear change from 2011 to 2013, when plants were operating under the 90% threshold needed to turn a profit. Petrochemical companies on average have shut down one plant each per year between 2014 and 2016, which has helped curb oversupply. Domestic demand and exports to Asia are growing as well. Total ethylene production climbed 1.7% in January to 590,100 tons.
Many chemical companies are upgrading their earnings forecasts for the fiscal year through March as the profit margin on petrochemical products rises. While concerns like rising crude prices remain, many expect the market to remain strong for at least the first half of 2017. Plant utilization will likely remain around 100%.