Japan Chemical Trading Blog

The latest chemical trading industry insights from Japan, Asia and the world, reported by the President of Daishin Corporation, Masa Oguchi.


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Masa Oguchi
President, Daishin Corporation
Born in Nara Prefecture, Japan, in 1973. Currently lives in Osaka.

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Tosoh Corporation

According to the financial results for the previous period announced on May 9, the sales of Tosoh Corporation were 772.3 billion yen (approx. 7.6 billion dollar), up 15% year-on-year from 668.5 billion yen and operating profit, profits from its core business (pre-tax), was 41.6 billion yen (approx. 408.5 million dollar), up 70% year-on-year from 24.5 billion yen.

Tosoh is a full-line Japanese chemical manufacturer, established in 1935 in Yamaguchi Prefecture as an electrolytic soda factory (the electrolytic soda industry specializes in the production of caustic soda, chlorine, and hydrogen by electrolysis of salt water). Its original name was Toyo Soda Manufacturing Co., Ltd.

The company produces caustic soda, ethylene amines, quartz materials, urethane materials, PVC, chloroprene rubber, cement, bromine compound, zirconia, ethylene, propylene, petroleum resin, PPS resin and other specialty products at its plants, which are located in Nanyo, Yamaguchi Prefecture, its place of birth, and Yokkaichi, Mie Prefecture.

PVC monomer production facilities in its Nanyo Complex whose operation had been suspended due to an accident in November 2011, resumed in 2012 and were in full operation throughout 2013, leading to an increase in shipping volume. The company’s exports have become profitable due to the depreciation of yen and the increase in the shipping volume of its specialty products. It seems that all these elements have led to the rise in the level of sales and profit.

The closing stock price (total market value) of the company as of May 9 was 247 billion yen (approx. 2.4 billion dollar), up 5.65% from the day before.

Tosoh Corporation

According to the financial results for the previous period announced on May 9, the sales of Tosoh Corporation were 772.3 billion yen (approx. 7.6 billion dollar), up 15% year-on-year from 668.5 billion yen and operating profit, profits from its core business (pre-tax), was 41.6 billion yen (approx. 408.5 million dollar), up 70% year-on-year from 24.5 billion yen.

Tosoh is a full-line Japanese chemical manufacturer, established in 1935 in Yamaguchi Prefecture as an electrolytic soda factory (the electrolytic soda industry specializes in the production of caustic soda, chlorine, and hydrogen by electrolysis of salt water). Its original name was Toyo Soda Manufacturing Co., Ltd.

The company produces caustic soda, ethylene amines, quartz materials, urethane materials, PVC, chloroprene rubber, cement, bromine compound, zirconia, ethylene, propylene, petroleum resin, PPS resin and other specialty products at its plants, which are located in Nanyo, Yamaguchi Prefecture, its place of birth, and Yokkaichi, Mie Prefecture.

PVC monomer production facilities in its Nanyo Complex whose operation had been suspended due to an accident in November 2011, resumed in 2012 and were in full operation throughout 2013, leading to an increase in shipping volume. The company’s exports have become profitable due to the depreciation of yen and the increase in the shipping volume of its specialty products. It seems that all these elements have led to the rise in the level of sales and profit.

The closing stock price (total market value) of the company as of May 9 was 247 billion yen (approx. 2.4 billion dollar), up 5.65% from the day before.

Nickel Supply Deficiency

An article on Japan Metal Bulletin dated May 9 states, “Sumitomo Metal Mining expects a supply deficiency in the worldwide balance between nickel supply and demand in 2014, for the first time in 4 years. Demand is estimated to be 1,915,000 tons, up 6.8% from the previous year, and production is estimated to be 1,885,000 tons, down 0.9% from the previous year.”

Nickel is a metal used for stainless steel, plating, and batteries and is mainly produced in Russia, Canada and Indonesia.

Since Indonesia imposed a ban on the export of nickel ore in January for the purpose of developing its domestic smelting and processing industry, the production of nickel has been in decline, leading to an increase in its international price. Substitute nickel ore produced in the Philippines has doubled in price compared with beginning of this year.

Meanwhile, production of stainless crude steel, a major application of nickel, has been steadily growing, led by China, a leading producer of steel, with the exception of the period immediately after the financial crisis.

Nickel Supply Deficiency

An article on Japan Metal Bulletin dated May 9 states, “Sumitomo Metal Mining expects a supply deficiency in the worldwide balance between nickel supply and demand in 2014, for the first time in 4 years. Demand is estimated to be 1,915,000 tons, up 6.8% from the previous year, and production is estimated to be 1,885,000 tons, down 0.9% from the previous year.”

Nickel is a metal used for stainless steel, plating, and batteries and is mainly produced in Russia, Canada and Indonesia.

Since Indonesia imposed a ban on the export of nickel ore in January for the purpose of developing its domestic smelting and processing industry, the production of nickel has been in decline, leading to an increase in its international price. Substitute nickel ore produced in the Philippines has doubled in price compared with beginning of this year.

Meanwhile, production of stainless crude steel, a major application of nickel, has been steadily growing, led by China, a leading producer of steel, with the exception of the period immediately after the financial crisis.

Benzene

According to an announcement by JX NIPPON OIL & ENERGY CORPORATION on May 7, the contractual price of benzene for May for Asia was determined as USD1268 per ton.

Benzene is a basic petrochemical used as a raw material for resin and adhesive. JX NIPPON OIL & ENERGY CORPORATION is the price leader of this product in Asia.

While the market price for styrene, a major application of benzene, is not really fluctuating, with a decrease in production due to periodic maintenances by Asian benzene manufacturers, the contractual price was determined at almost the same price as the previous month (USD3 per ton up from the previous month).

Since shale gas produces very little benzene, the production of benzene decreased significantly in the U.S. where the shale gas revolution is progressing rapidly. Therefore, the bottom price of benzene is partially supported by robust exports to the U.S.

Benzene

According to an announcement by JX NIPPON OIL & ENERGY CORPORATION on May 7, the contractual price of benzene for May for Asia was determined as USD1268 per ton.

Benzene is a basic petrochemical used as a raw material for resin and adhesive. JX NIPPON OIL & ENERGY CORPORATION is the price leader of this product in Asia.

While the market price for styrene, a major application of benzene, is not really fluctuating, with a decrease in production due to periodic maintenances by Asian benzene manufacturers, the contractual price was determined at almost the same price as the previous month (USD3 per ton up from the previous month).

Since shale gas produces very little benzene, the production of benzene decreased significantly in the U.S. where the shale gas revolution is progressing rapidly. Therefore, the bottom price of benzene is partially supported by robust exports to the U.S.

Molybdenum

The price of molybdenum is increasing. International index LME increased from USD23.50 per kg at the end of March to the latest USD29.50 per kg, an increase by about 25%.

Molybdenum is a metal produced mainly as a by-product of copper and among the main producers are the U.S., Chile, and China. Molybdenum is mainly used as an additive to special steel for automobile use and as a raw material of catalyst.

The price of molybdenum has been on the increase since just after the earthquake in Chile, one of the main producing countries, in early April as well as the background of robust demand led by the stable increase in the automobile production.

Historically, the price of molybdenum had been hovering around at lower than USD10 per kg for a long time until 2000. However, it started to increase around 2002, and before the financial crisis, recorded the highest price in the market at more than USD70 per kg.

Molybdenum

The price of molybdenum is increasing. International index LME increased from USD23.50 per kg at the end of March to the latest USD29.50 per kg, an increase by about 25%.

Molybdenum is a metal produced mainly as a by-product of copper and among the main producers are the U.S., Chile, and China. Molybdenum is mainly used as an additive to special steel for automobile use and as a raw material of catalyst.

The price of molybdenum has been on the increase since just after the earthquake in Chile, one of the main producing countries, in early April as well as the background of robust demand led by the stable increase in the automobile production.

Historically, the price of molybdenum had been hovering around at lower than USD10 per kg for a long time until 2000. However, it started to increase around 2002, and before the financial crisis, recorded the highest price in the market at more than USD70 per kg.

Styrene Monomer

A Nikkei Newspaper article dated May 2nd says, “Spot price for styrene monomer in East Asia is around USD1,570 to USD1,580 a ton — around USD70 down from early April.”

Styrene monomer is a flammable liquid produced by hydrogenating ethyl benzene using a catalyst and used as a raw material for synthetic resin and rubber such as polystyrene, ABS, and SBR as well as for paint materials.

The export ratio for the product is high with approximately 40% of production in Japan being exported to foreign countries including China. However, with the increase in the production capacity in China and South Korea and an economic slowdown in China, an oversupply trend is continuing.

It would be necessary for manufacturers with a production base within Japan to decrease the production amount of styrene monomer in small increments and shift the business portfolio to include a more competitive family of products while their production margin is still in the positive.

Styrene Monomer

A Nikkei Newspaper article dated May 2nd says, “Spot price for styrene monomer in East Asia is around USD1,570 to USD1,580 a ton — around USD70 down from early April.”

Styrene monomer is a flammable liquid produced by hydrogenating ethyl benzene using a catalyst and used as a raw material for synthetic resin and rubber such as polystyrene, ABS, and SBR as well as for paint materials.

The export ratio for the product is high with approximately 40% of production in Japan being exported to foreign countries including China. However, with the increase in the production capacity in China and South Korea and an economic slowdown in China, an oversupply trend is continuing.

It would be necessary for manufacturers with a production base within Japan to decrease the production amount of styrene monomer in small increments and shift the business portfolio to include a more competitive family of products while their production margin is still in the positive.

Tax Increase and Sales of Cars

On May 1, “the Japan Automobile Dealers Association” announced that the number of passenger cars, freight cars and buses sold in April in Japan decreased 12.4% year-on-year from 213,165 to 188,864 units excluding light cars (kei cars).
It was the first time the sales decreased year-on-year in 8 months from August last year.

As was expected, it seems there was a rebound against the last-minute demand before the consumption tax increase from 5% to 8% in April (the number of sales in March increased by 14.5% year-on-year to 481,039 units).

The number of sales of light cars (kei cars), which fall into a different standard of displacement, that is, 660cc or less, slightly increased by 2.9% year-on-year to 1,563,621 units (according to the announcement of “the Japan Light Motor Vehicle and Motorcycle Association” on May 1).

As the upkeep cost such as tax and insurance fees as well as the car price are cheaper, the penetration of light cars is growing year by year.

The automobile industry, which is Japan’s key industry, has a wide workforce base of over 5 million (about 8% of the entire working population of Japan) in its related industries. Therefore, it is attracting attention for how long the decrease trend in sales as a rebound will persist.

Tax Increase and Sales of Cars

On May 1, “the Japan Automobile Dealers Association” announced that the number of passenger cars, freight cars and buses sold in April in Japan decreased 12.4% year-on-year from 213,165 to 188,864 units excluding light cars (kei cars).
It was the first time the sales decreased year-on-year in 8 months from August last year.

As was expected, it seems there was a rebound against the last-minute demand before the consumption tax increase from 5% to 8% in April (the number of sales in March increased by 14.5% year-on-year to 481,039 units).

The number of sales of light cars (kei cars), which fall into a different standard of displacement, that is, 660cc or less, slightly increased by 2.9% year-on-year to 1,563,621 units (according to the announcement of “the Japan Light Motor Vehicle and Motorcycle Association” on May 1).

As the upkeep cost such as tax and insurance fees as well as the car price are cheaper, the penetration of light cars is growing year by year.

The automobile industry, which is Japan’s key industry, has a wide workforce base of over 5 million (about 8% of the entire working population of Japan) in its related industries. Therefore, it is attracting attention for how long the decrease trend in sales as a rebound will persist.

Caprolactam

On April 28, Ube Industries announced the downward revision of earnings forecast for the previous fiscal year (April, 2013 – March, 2014).

Though shipments of cement and ready-mixed concrete was buoyant thanks to robust domestic sales lead by reconstruction demands, etc., it did not offset the declining performance in the chemical products.

The slump, while the weaker yen has served as a spur to profits, shows the chemicals segment has been in a severe situation.

Caprolactam, their main product, is used as raw material for nylon.
Last year Chinese manufacturers increased production capacity for approx. 700,000 ton which is 15% of world demand, so that the prices have been faltering.

Last month Ube stopped production of caprolactam at the Sakai Factory, Osaka, which has a relatively low competitiveness among their production bases.

Caprolactam

On April 28, Ube Industries announced the downward revision of earnings forecast for the previous fiscal year (April, 2013 – March, 2014).

Though shipments of cement and ready-mixed concrete was buoyant thanks to robust domestic sales lead by reconstruction demands, etc., it did not offset the declining performance in the chemical products.

The slump, while the weaker yen has served as a spur to profits, shows the chemicals segment has been in a severe situation.

Caprolactam, their main product, is used as raw material for nylon.
Last year Chinese manufacturers increased production capacity for approx. 700,000 ton which is 15% of world demand, so that the prices have been faltering.

Last month Ube stopped production of caprolactam at the Sakai Factory, Osaka, which has a relatively low competitiveness among their production bases.


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