MOSCOW (MRC) -- Ethylene facilities, which produce precursors for a variety of chemical products, continue to operate at a high level, with capacity utilization in the January-June period hitting 96.2%, according to the Japan Petrochemical Industry Association, said Asia.nikei.
This is the first time since the first half of 2010 that capacity utilization has exceeded 95%, the benchmark for strong performance. High capacity utilization is expected to continue in the second half as well.
However, production of four commodity-grade materials, including polyethylene, totaled 2.65 million tons in the first half, around 10% less than in the first half of 2010 when ethylene plant capacity utilization was around the same level. That is because companies reduced production capacity between 2014 and 2016.
A movement away from production of commodity-grade materials and toward high-performance products is spreading, as shown by Sumitomo Chemical's construction of a plant to make high-performance resins for aircraft. As a result, the day may be close when ethylene plant capacity utilization is no longer a good barometer of chemical companies' performance.
As MRC informed earlier, Asia could source ethylene and propylene from farther afield as Japan continues to shut petrochemical production capacity. Japan exported 800,000 tonnes of ethylene and 1.3 million tonnes of propylene, a 10% decline from 2014. During 2015, Japan also saw another petrochemical plant closing down, namely Sumitomo Chemicals’ plant in Chiba. This closing removed an estimated 416,000 tonnes of ethylene capacity and 288,000 tonnes of propylene capacity from the market.
MRC