If, as many expect, supplies of basic chemicals remain tight, imObservers of Japan's chemical in- ter, most economists expect the ports could grow eyen faster. Redustry throughout the world have country's favorable economic climate cently, for instance, Mitsui Petrobeen focusing their attention on the to continue, at least through the chemical said that it would import industry's push into higher value- remainder of 1988. They do not be- ethylene—the first time that the added products such as pharmaceu- lieve that strong domestic demand firm has done so—until its own ethticals and advanced materials. Right- and hefty direct investment in new ylene unit in Yamaguchi Prefecture fully so. And they are charting the plants and equipment will disap- gets back on stream early next year. industry's sorties into overseas in- pear soon. The Ministry of International vestments, especially in the U.S. In the third quarter, a temporari- Trade & Industry (MITI) estimates "Hollowing out," it is called in ly weaker yen helped to boost Japa- that Japan's ethylene capacity now Japan. nese exports, which no doubt con- stands at 5.2 million metric tons. But, although the focus has been tributed to a resumption of econom- Demand this year will come perilon these strategic maneuverings, the ic growth in Japan. For the chemical ously close to that figure. If ethylJapanese chemical industry has been industry, however, the strong yen ene output hits only 5.0 million metquietly chalking up impressive gains has done more good than harm. Al- ric tons this year, it would reprein production, sales, and profits in though it has hurt exports, it, along sent a healthy 9% increase over last its most basic sectors, such as petro- with slumping oil prices, has kept year and would break the old recchemicals and industrial organics naphtha and other petrochemical ord of 4.8 million metric tons set back in 1979. and inorganics. raw material prices low. Credit for this performance goes Demand for ethylene derivatives, On a U.S. dollar basis, Japanese to a strong domestic economy that chemical exports this year probably says MITI, likely will remain strong has fueled a strong domestic de- will be up about 20%. But that re- for the remainder of the year. Durmand for basic chemical products. flects the vagaries of currency ex- ing this year's fourth quarter, for Japan's domestically-based, rather change rate and is misleading. On a instance, demand for low-density than export-based, economy has been yen basis, they will be only about polyethylene is expected to be 3.5% the envy of the industrialized world. 5% higher, whereas chemical im- higher than in last year's fourth Although the economy in Japan ports will increase at double that quarter. High-density polyethylene slipped slightly in the second quar- rate, or about 10%. demand will be 5.5% higher. As a result, total fourth-quarter ethylene demand will be Synthetic fibers All chemicals Petrochemicals 1,332,700 metric tons, acProduction index Production index Production index cording to MITI. That's bet1001 125 130 I ter than a 5.3 million metric ton annual rate, which 120 is why Mitsui Petrochemi98 120 cal is looking at ethylene 115 imports. Japanese officials expect 96 110 this year's petrochemical 110 surge to slow down next year. Meanwhile, ethylene 105 mmsEEsmEmammmmmm—i ioo FËBËËËÊËMÊËœÊBmaMÊÊÊSEsmBBm 94 capacity will increase, from JFMAMJJ ASONDJFMAMJ J FM AM J J A S O N D J F M A M J J FMAMJ J ASON D J FMAM J this year's 5.2 million met1 9 8 7 1 9 8 7 -1988—19871 9 8 8 • 1987 1 I 1QRft 1 I 1Qft7 ' ' 1Q«R ' I 19B7 I I 19R8—* ric tons to a possible 5.8 million metric tons, if all Synthetic rubber Fertilizer Plastics debottlenecking is includProduction index Production index Production index ed. This capacity increase 140 100 125 and possible demand slow130 120 down has MITI concerned. 95 With an eye on these trends 120 115 Ι and a possible capacity 90 buildup elsewhere in Asia, 110 110 MITI may try once again to put limits on new eth85 100 105 ylene plant construction in Japan. Previous legal re90 I 80 100 JFMAMJJASONDJFMAMJ J F M A M J J A S O N DJ FM A M J J F M A M J J A S ON DJ F M A M J straints on ethylene plant l_ 1987 1 L.1988—I I 1987 1 L—1988—' ' 1987 ' ·—1988—» capacity expired earlier this year. Note: Base year for indexes, which are seasonally adjusted, is 1985 = 100. Source: Ministry of International Trade & Industry Earl Anderson
Domestic demand buoys Japan's basic chemicals
November 2 1 , 1988 C&EN
21
