Weak demand from China, increased imports keeps ethylene output down in Japan

17-Nov-11

Lackluster demand from China has impacted ethylene output in Japan, as producers reduce run rates to cope with the weak markets. Overall, the industry's utilization rate for ethylene plants has likely sank below 90% in October. Mitsubishi Chemical Corp. is among the Japanese firms to have reduced production of ethylene, mainly because of weakening demand in China, as per Nikkei. Through the month of September, Mitsubishi had reduced run rates, operating at over 90% of capacity. As demand continues to dampen, utilization rate is likely to fall to 80-85%. Mitsubishi accounts for nearly 20% of the industry's total output capacity in Japan. Asahi Kasei Corp. has gradually reduced run rates to 85% at a plant in Kurashiki, Okayama Prefecture, since last month. Additionally, a stronger yen has spurred an inflow of cheaper foreign resins into the Japanese market, causing domestic resin producers to cut local output. This, combined with lower Chinese demand, has led to reduced production of ethylene.