August 23, 2008

Japanese Chemical Makers Striving to Depend Less on Oil

Tokyo, Aug. 23 (Jiji Press)--Japanese chemical makers are promoting the use of raw materials other than naphtha to combat soaring crude oil prices and ensure stable production.

In departure from dependence on naphtha as a key raw material for chemical products, Sumitomo Chemical Co. will open a plant in Saudi Arabia to make raw materials of plastics from natural gas and ethane released during oil drilling.

Once the plant starts operating by the end of March next year, Sumitomo Chemical's annual output capacity of ethylene, a basic petrochemical material, will reach the world's top level of 1.3 million tons.

Although ethane is much cheaper than naphtha, the transportation difficulty has prevented its practical use, a Sumitomo Chemical official says.

The company hopes to overcome the cost disadvantage by building a plant in the oil-producing country.

Meanwhile, Asahi Kasei Corp. will construct a plant in Thailand to make raw materials of acrylic fiber and acrylic sheets from propane gas, eyeing its operation start in late 2010.

Mitsui Chemicals Inc. plans to open a facility at a plant in Takaishi, Osaka Prefecture, during fiscal 2008, which ends next March, to test-produce plastics materials by having carbon dioxide in the air react with hydrogen.

Japanese chemical makers expected naphtha prices to stand at around 70,000 yen per kiloliter in fiscal 2008, but they have already topped 90,000 yen at one time.

Although the upsurge has recently been taking a breather, many in the industry remain cautious. A senior official of a major Japanese chemical maker says continued falls of naphtha prices cannot be anticipated, stressing the need to shift to alternative raw materials.END

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