Japan's ethylene plant run rate hits record low of 68.6% in March
The Japan Petrochemical Industry Association (JPCA) said on Thursday that the utilization rate of ethylene plants fell to a record low of 68.6% in March, as producers cut output in anticipation of feedstock procurement difficulties and due to planned maintenance.
Japan has 12 ethylene plants that crack naphtha, a crude oil byproduct, into basic chemicals such as ethylene and propylene, which are used to make intermediates like resins for a wide range of end products.
Japan imports about 40% of its naphtha from the Middle East and relies on the region for 95% of the crude oil used in domestic refining, which supplies roughly 40% of its naphtha demand. Procurement has been hampered by the blockade of the Strait of Hormuz.
Given uncertainty over naphtha supply and the high cost of stopping and restarting crackers, producers are maintaining operations at reduced run rates to preserve the supply chain, an official at the JPCA said.
The 68.6% utilization rate in March was the lowest since records began in January 1996. While the minimum rate needed to sustain operations varies by plant, it is generally estimated at around 70%, he added.
With four units undergoing scheduled maintenance, compared with none a year earlier, ethylene production in March totaled 272,600 metric tons, down 38.8% year on year.
However, shipments of major ethylene-derived resins including polyethylene, polypropylene and polystyrene, were nearly flat from a year earlier, supported by inventory drawdowns, the official said.
Stocks of such key products remain sufficient to meet domestic demand for more than three months, with no immediate risk of shortages, he added.
Concerns have mounted among manufacturers over the shortage of naphtha - a key feedstock for petrochemicals - and related materials, with dozens of companies announcing actual or possible order stoppages earlier this month despite government assurances of sufficient stock.
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