Japan Chemical Makers Cutting Output Amid Naphtha Price Surge

Tokyo, July 25 (Jiji Press)–Japanese chemical maker are scaling down their production as their profitability has been falling rapidly due to faster-than-expected rises in the prices of naphtha, a basic material for petrochemical products.

Industry leader Mitsubishi Chemical Corp. has decided to postpone the launch of the operation of its new polycarbonate resin plant in Kitakyushu, Fukuoka Prefecture, southwestern Japan.

The plant, which has an annual output capacity of 60,000 tons, was initially scheduled to start operating this month.

A Mitsubishi Chemical spokesman said the plant is now expected to start operating in November at the earliest, while noting that the timing will depend on market conditions. Polycarbonate resin is used for a wide range of items, including DVDs and auto parts.

Meanwhile, Mitsui Chemicals Inc. has scrapped one of its three production lines at its high-purity terephthalic acid plant in Waki, Yamaguchi Prefecture, western Japan. One of the two other lines has been suspended.

As a result, the plant’s annual output capacity for high-purity terephthalic acid, a material for polyester fiber, has fallen 50 pct to 400,000 tons.

Mitsui Chemicals President Kenji Fujiyoshi, who also serves as chairman of the Japan Petrochemical Industry Association, said that chemical makers have been unable to fully pass higher materials costs on to their product prices.

The chemical makers may have to mull additional production cuts if demand continues falling due to such negative factors as a further economic slowdown in the United States, industry sources said. END

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