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Japanese refiners facing stagnant market may cut capacity

May 28/2020

MOSCOW (MRC) -- Japanese refineries may be forced to shut down capacity once again unless they see a strong recovery from the coronavirus pandemic, reported Reuters.

Theyve been hit by declining use for fuel at home, competition from newer refineries in China and South Korea dominating in other markets, as well.

Idemitsu Kosan on Tuesday reported an annual loss, like its competitors have done in recent days.

Executive Officer Noriaki Sakai said Japans second-biggest refiner expects fuel sales to fall 30% in the year through March 2021 while President Shunichi Kito said the company may need to consider some measures (to consolidate refineries) in the mid-2020s.

Tsutomu Sugimori, president of JXTG Holdings, Japans biggest refiner, told an earnings conference last week: We have been considering consolidation of refineries since our merger in 2017. We will adjust our production facilities to reflect weakening demand.

JXTG, which accounts for about half of the market, has already decided to shut a refinery in Osaka with partner PetroChina and shut its Muroran refinery in Hokkaido.

Japans oil refining capacity peaked at 5.6 million barrels per day (bpd) in 1982, data from the BP Statistical Review of Energy shows.

It currently has about 3.4 million bpd of capacity in mostly aging refineries and industry ministry estimates suggest that could fall to 2.3 million bpd by the end of the decade.

As MRC wrote before, JXTG Nippon Oil and Energy is in plans to restart its cracker following an unplanned outage. The company is likely to resume operations at the cracker early this week. The cracker was shut owing to technical issues on May 4, 2020. Located at Kawasaki in Japan, the cracker has an ethylene production capacity of 460,000 mt/year and propylene production capacity of 235,000 mt/year.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.
Author:Margaret Volkova
Tags:PP, PE, LLDPE, crude and gaz condensate, PP block copolymer, homopolymer PP, propylene, LDPE, HDPE, ethylene, petrochemistry, Idemitsu, Nippon, Rossiya, Japan.
Category:General News
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