Upstream as well as downstream markets across the globe have witnessed rapid changes as a response Japan’s massive earthquake followed by a tsunami, that rocked the north of Japan at the end of last week, as per Chemorbis. According to market sources, the catastrophe has resulted in a 20% reduction in refining capacity in Japan which makes up 3.5% of Asia’s and 1% of the global refining capacity, with several refineries including JX Nippon Oil & Energy's Sendai refinery, Kashima and Negishi refineries, Cosmo Oil's Chiba refinery, and Kyokuto Petroleum Industry's Chiba refinery, suspending operations.
On Nymex, crude oil prices had already started to move down after having breached US$105/barrel last Monday. Following news of the devastating earthquake on Friday, crude futures fell towards the US$100/barrel threshold as refinery closures in Japan have led to views that the country will import less volumes for the short term. On the other hand, some analysts are speculating that the country will need more energy supply later as power and nuclear plants have been damaged which may cause a rebound in crude oil prices over the longer term. As many crackers in the country were down following the earthquake, the Asian naphtha market also moved down losing around US$30/ton on the week as Japan is expected to import fewer cargoes in the near term. According to reports, aromatic petrochemical prices in Asia also reacted to the massive earthquake and maintained their upward move this week. Several aromatic plants across the region were shut due to emergency reasons. The total aromatics capacity being affected is considered to make up 30% of Japan’s production capacity. Monomer markets were also hit, with Japan’s ethylene capacity taking the lead as it makes up 4% of Asia’s and 1.4% of the global ethylene capacity. The downstream markets were also affected, with many companies operating in various sectors halting their production at their facilities. The companies include Sony Corp, Nissan Motor Co, Toyota Motor Co, Honda Motor Co, Fuji Heavy Industries Ltd, Kirin Holdings, Asahi Kasei Corp , GlaxoSmithKline , JSR , Nestle , Nippon Paper Group , Sapporo Breweries Ltd and Morinaga Milk Industry.