Naphtha crackers in Japan embark on reduction in operating rates

07-Jul-08

As oil and feedstock prices spike to record levels and hurt margins, Japan's Sumitomo Chemical Co has slashed operating rate at its sole naphtha cracker in eastern Japan by 4%. This makes Sumitomo the first Japanese firm to rein in operating rates on account of recent sharp rises in naphtha prices that have spiked past an all time high of US$1245/ton. Sumitomo Chemical had earlier cut operating rates by 4% at its naphtha cracker in Chiba, with a capacity to produce 415,000 tpa of ethylene. Sanyo Petrochemical, a unit of Asahi Kasei Corp is considering cutting runs at its 504,000 tpa naphtha cracker in western Japan by around 5% by next week.This cut has also been influenced by a reduction in demand for polyethylene and polystyrene from China and other Asian countries. However, the following naphtha crackers continue to be operated at full capacity : Naphtha crackers operated by Mitsubishi Chemical Corp, Mitsubishi Chemical Holdings, Mitsui Chemicals, Maruzen Petrochemical Co, and Tosoh Corp, and Nippon Oil Corp's sole naphtha cracker. The markets will be largely impacted if the other Japanese naphtha crackers follow suit.