INTERNATIONAL BUSINESS
Chemical Sales, Earnings Improve in Japan All chemicals
Petrochemicals
Production index 130
Production index 120 f
120
110
100
ASONDJFMAMJJASONDJFMAMJJ
ASONDJFMAMJJASONDJFMAMJJ 1983 I
1984
1983 '
1 1—1985—'
1984
Synthetic fibers
Synthetic rubber
Production index 104 1
Production index 120 f
102
110
1 I—1985-J
Bpy ioo
98 K& : t JU h l'A*ΙΜ^Ι¥Μ& 4.ÏJ
90 [
ASONDJFMAMJJASONDJ FMAMJJ
1983
munf
ASONDJFMAMJJ ASONDJFMAMJJ
1-1985—1
-1984-
1983 I
1984
Fertilizer
Plastics
Production index 90 I
Production index 1301
70 [âàauj^i^ifgMi-iliikl ASONDJ F M AM JJ ASONDJ FMAMJJ
1983
-1984-
L-IQftcJ
-1985-
100 ASONDJ FMAMJJASONDJFMAMJJ
1983
-1984-
Note: Base year for ail indexes, which are seasonally adjusted, is 1980 = 100. Source: Ministry of International Trade & Industry
8
December 2, 1985 C&EN
' L—|985_J
I I-1985-I
In Japan, the economy hasn't perked up the way Japanese chemical companies had hoped it would. On the international front, chemical imports are increasing rapidly, but exports, though growing, are hardly keeping pace. Even if the government succeeds in stimulating the economy, the effect probably will come too late to do much good for the bottom lines of most Japanese chemical companies in this fiscal year. And, as the yen gets stronger, it is bound to make imports more attractive and export sales more difficult to negotiate. Despite these handicaps, many Japanese chemical companies are managing to improve their sales and profit picture. Most of the large Japanese chemical companies that have reported their financial results for the first half of their fiscal year (in most cases, ending in September) have met or exceeded estimates made earlier in the year for both sales and earnings. The second half (ending March 1986) will bring tougher sledding for most of these companies. Still, they are likely to maintain sales and earnings at least at first-half levels. And if they do, many of them will post better full-year results in fiscal 1985 than they did last year. For instance, combined sales for 10 of Japan's leading chemical companies tracked by C&EN likely will increase about 2.5% over last year to 5.4 trillion yen. That's about $26.7 billion at the current exchange rate ($1.00 = 203 yen). Net income, however, should be up close to 15%, with the strongest gain already having come in the first half. Just as the strong dollar has given U.S. companies fits, a strengthening yen could cause some trade headaches for Japanese chemical companies. In February, the yen stood at 259 to the dollar. It now is a much stronger 203, and chances are that it will get stronger yet. A stronger yen, of course, means that Japanese chemical exports become less competitive in world markets, while the prices of chemical imports become more attractive. Japanese chemical firms, particularly those with large petrochemical operations, can do without that. They have been losing their international competitive edge ever since the two oil crises in the 1970s. More recently, petrochemicals from new, low-cost producers, particularly Saudi Arabia, have poured into Japan and have usurped some of Japan's chemical export business in southeast Asia. In fact, this year Japan probably will become a net importer of petrochemicals for the first time. Meanwhile, increasing imports and a stronger yen are keeping a lid on prices. Recent attempts to raise prices of several basic petrochemicals met with sharp customer resistance. That's why the second half of fiscal 1985 doesn't look quite so rosy as the first half. Earl Anderson, New York
