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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Increase in Ethylene Price in Asia

According to an article in the Nikkei Newspaper dated July 12th, the “Spot price of ethylene has increased and is now approximately 1,520 USD/ton in East Asia, up 6% from a month ago”.

Ethylene is the most essential base ingredient for petrochemical products, and in Japan, it is produced through thermal decomposition of naphtha.
However, Japan is at a great disadvantage in price competition compared to some countries, including the U.S., where ethylene is produced from ethane that is obtained from shale gas.

The underlying reasons for the increase in price are that the supply quantity has decreased due to frequent periodic maintenance in ethylene plants in Asia and that the demand for ethylene has increased in China due to increase in production capacity of polyethylene derivatives.
There is also speculation that the export volume to Taiwan will increase due to production problems at a Taiwanese manufacturer.

Recently, the price difference between ethylene and naphtha has increased to over 500 USD/ton.
Since it would be difficult for Japanese companies in terms of structure to maintain long-term competitiveness, they need to promote capacity reduction in a planned way.

Increase in Ethylene Price in Asia

According to an article in the Nikkei Newspaper dated July 12th, the “Spot price of ethylene has increased and is now approximately 1,520 USD/ton in East Asia, up 6% from a month ago”.

Ethylene is the most essential base ingredient for petrochemical products, and in Japan, it is produced through thermal decomposition of naphtha.
However, Japan is at a great disadvantage in price competition compared to some countries, including the U.S., where ethylene is produced from ethane that is obtained from shale gas.

The underlying reasons for the increase in price are that the supply quantity has decreased due to frequent periodic maintenance in ethylene plants in Asia and that the demand for ethylene has increased in China due to increase in production capacity of polyethylene derivatives.
There is also speculation that the export volume to Taiwan will increase due to production problems at a Taiwanese manufacturer.

Recently, the price difference between ethylene and naphtha has increased to over 500 USD/ton.
Since it would be difficult for Japanese companies in terms of structure to maintain long-term competitiveness, they need to promote capacity reduction in a planned way.

Price Increase of Caprolactam

I mentioned in this weblog article on June 28 about the price increase of benzene. Now the price of caprolactam, which is derived from cyclohexane obtained through the hydrogenation of benzene, is also increasing.Caprolactam is used as a raw material for nylon.
In recent years, the price of caprolactam has been low due to a continuous production increase in China.

According to a Nikkei Newspaper article on July 4, Ube Industries, Ltd., the biggest caprolactam manufacturer in Japan with production facilities in Japan (Ube), Thailand, and Spain “offered to large-demand customers a price of USD2,375 a ton for the month of July, which was USD140 higher than the price for June”.Chinese manufacturers are also increasing their prices.
Recent rising crude oil prices have started to impact on prices of various products.

Price Increase of Caprolactam

I mentioned in this weblog article on June 28 about the price increase of benzene. Now the price of caprolactam, which is derived from cyclohexane obtained through the hydrogenation of benzene, is also increasing.Caprolactam is used as a raw material for nylon.
In recent years, the price of caprolactam has been low due to a continuous production increase in China.

According to a Nikkei Newspaper article on July 4, Ube Industries, Ltd., the biggest caprolactam manufacturer in Japan with production facilities in Japan (Ube), Thailand, and Spain “offered to large-demand customers a price of USD2,375 a ton for the month of July, which was USD140 higher than the price for June”.Chinese manufacturers are also increasing their prices.
Recent rising crude oil prices have started to impact on prices of various products.

Prices of Benzene and Paraxylene Increased

According to the Nikkei Newspaper on June 27, East Asian spot prices of Benzene rose about 5% to USD1,410 – USD1,430 per ton in the past one week.
Some problems in an oil refinery in the U.S., to where manufacturers in Japan and South Korea export benzene, made the prices in the U.S. rise drastically, which impacted the Asian market.
The production of paraxylene has been decreasing, but the market now seems to be rallying sharply.
On May 28, we reported that its prices dropped to USD1,200 – USD1,250 per ton in this weblog. However, I have heard it has recently recovered to about USD1,400 per ton.

Prices of Benzene and Paraxylene Increased

According to the Nikkei Newspaper on June 27, East Asian spot prices of Benzene rose about 5% to USD1,410 – USD1,430 per ton in the past one week.
Some problems in an oil refinery in the U.S., to where manufacturers in Japan and South Korea export benzene, made the prices in the U.S. rise drastically, which impacted the Asian market.
The production of paraxylene has been decreasing, but the market now seems to be rallying sharply.
On May 28, we reported that its prices dropped to USD1,200 – USD1,250 per ton in this weblog. However, I have heard it has recently recovered to about USD1,400 per ton.

Indium Prices Down

According to Japan Metal Bulletin on June 10, domestic prices of low-grade indium for alloy and others fell by JPY1,000/kg from the previous week to JPY73,000 – 77,000.

Indium is a rare metal produced as a by-product of Zinc. China is the biggest producing country. Since speculation in China has pushed prices up recently, there is concern about a sudden price drop. Fanya Metal Exchange, the biggest rare metal exchange in China, is speculated to have an inventory exceeding 2,500 tons; this is well over the 600 tons that is the annual virgin indium demand throughout the world, excluding recycled products.

According to Metal Bulletin (UK), the Chinese domestic market has been consistent at around RMB5,000/kg since April, up about 25% from RMB4,000/kg a year ago.
Japan is one of the dominant markets; but domestic demand in Japan at present seems stable. In the long term, domestic usage is gradually decreasing.

Indium Prices Down

According to Japan Metal Bulletin on June 10, domestic prices of low-grade indium for alloy and others fell by JPY1,000/kg from the previous week to JPY73,000 – 77,000.

Indium is a rare metal produced as a by-product of Zinc. China is the biggest producing country. Since speculation in China has pushed prices up recently, there is concern about a sudden price drop. Fanya Metal Exchange, the biggest rare metal exchange in China, is speculated to have an inventory exceeding 2,500 tons; this is well over the 600 tons that is the annual virgin indium demand throughout the world, excluding recycled products.

According to Metal Bulletin (UK), the Chinese domestic market has been consistent at around RMB5,000/kg since April, up about 25% from RMB4,000/kg a year ago.
Japan is one of the dominant markets; but domestic demand in Japan at present seems stable. In the long term, domestic usage is gradually decreasing.

PVC Resin Price in Asia

An article in the Chemical Daily dated June 5 says that PVC resin market in Asia is on a rebound and the price for June’s shipment was up USD20-30 per ton over the previous month”.
PVC resin is a typical plastic used for various applications including sundry goods, construction materials, and pipes. It is mainly produced from naphtha-derived ethylene salt-derived and chlorine salt. Over 35 million tons of PVC resin is manufactured worldwide and out of the volume, over 1,000 tons is produced in China.

Compared to the situation about 20 years ago when I started my career in this industry, the amount of production in China is increasing at a furious speed.
Around 150 to 200 tons of the material is produced in Japan, which is about the same amount as produced in Korea and Taiwan. These countries are in the export position as the amount of production exceeds their domestic consumption.
China, India, Australia, etc. are in the export position.
It seems that an equipment failure experienced by a Taiwan manufacturer in May pushed up the price, as people expected a decline in supply. Whether or not the price increase continues in the future depends on whether or not the demand will show an upward trend.

The PVC resin market in Japan was JPY192 per kilo, up JPY15 (approximately 8%) compared to the price at the end of last year supported by a strong increase in the number of public works. (Nikkei Newspaper dated on June 2)

PVC Resin Price in Asia

An article in the Chemical Daily dated June 5 says that PVC resin market in Asia is on a rebound and the price for June’s shipment was up USD20-30 per ton over the previous month”.
PVC resin is a typical plastic used for various applications including sundry goods, construction materials, and pipes. It is mainly produced from naphtha-derived ethylene salt-derived and chlorine salt. Over 35 million tons of PVC resin is manufactured worldwide and out of the volume, over 1,000 tons is produced in China.

Compared to the situation about 20 years ago when I started my career in this industry, the amount of production in China is increasing at a furious speed.
Around 150 to 200 tons of the material is produced in Japan, which is about the same amount as produced in Korea and Taiwan. These countries are in the export position as the amount of production exceeds their domestic consumption.
China, India, Australia, etc. are in the export position.
It seems that an equipment failure experienced by a Taiwan manufacturer in May pushed up the price, as people expected a decline in supply. Whether or not the price increase continues in the future depends on whether or not the demand will show an upward trend.

The PVC resin market in Japan was JPY192 per kilo, up JPY15 (approximately 8%) compared to the price at the end of last year supported by a strong increase in the number of public works. (Nikkei Newspaper dated on June 2)

Increase in Benzene Price

On June 2, JX Nippon Oil & Energy Corporation announced, “The benzene contract price for Asian countries in June was settled at USD1,290/ton, USD22 up from May”.

Benzene is one of the aromatic compounds produced from cracked gasoline derived from naphtha, and as an elemental petrochemical, is used as raw material for resins and adhesives. During the distillation process of this compound, other aromatic compounds such as xylene, toluene, etc., are also obtained.

In our article on May 28, we mentioned a paraxylene production decrease.
This cutback caused a benzene production decrease and forced a price increase in a tight supply-demand situation.

As we reported in May, when the pricing in that month was announced, the export volume to the U.S., where shale gas (from which not much Benzene is produced) usage is robustly expanding, and a decrease in Benzene production led by this also contributes to the tight supply-demand situation.

Increase in Benzene Price

On June 2, JX Nippon Oil & Energy Corporation announced, “The benzene contract price for Asian countries in June was settled at USD1,290/ton, USD22 up from May”.

Benzene is one of the aromatic compounds produced from cracked gasoline derived from naphtha, and as an elemental petrochemical, is used as raw material for resins and adhesives. During the distillation process of this compound, other aromatic compounds such as xylene, toluene, etc., are also obtained.

In our article on May 28, we mentioned a paraxylene production decrease.
This cutback caused a benzene production decrease and forced a price increase in a tight supply-demand situation.

As we reported in May, when the pricing in that month was announced, the export volume to the U.S., where shale gas (from which not much Benzene is produced) usage is robustly expanding, and a decrease in Benzene production led by this also contributes to the tight supply-demand situation.

Sumitomo Seika Chemicals to Build a New Factory in South Korea

On May 28, Sumitomo Seika Chemicals announced that it is going to construct a superabsorbent polymer (SAP) production facility (annual production capacity 59,000 tons) in Yeosu, South Korea, investing about 10 billion yen, operation to start in May 2016, their 4th SAP production base after Japan
(Himeji), Singapore and France.

SAP is a powder which pectizes water, saline, urine, blood or other liquid by absorbing fluid and is used to manufacture paper diapers, sanitary goods, etc. It can absorb hundreds times as much water as its own weight and syneresis is hardly caused even when pressure is applied.

Demand for SAP has been increasing year by year as paper diapers are becoming popular in emerging countries and demand for adult diapers is increasing in advanced countries where the population is aging.

Upon the operation commencement of the new factory in May, 2016, Sumitomo Seika Chemicals will have 386,000 tons of SAP annual production capacity.

Other SAP makers in Japan are Nippon Shokubai and San-Dia Polymers among others.

Sumitomo Seika Chemicals to Build a New Factory in South Korea

On May 28, Sumitomo Seika Chemicals announced that it is going to construct a superabsorbent polymer (SAP) production facility (annual production capacity 59,000 tons) in Yeosu, South Korea, investing about 10 billion yen, operation to start in May 2016, their 4th SAP production base after Japan
(Himeji), Singapore and France.

SAP is a powder which pectizes water, saline, urine, blood or other liquid by absorbing fluid and is used to manufacture paper diapers, sanitary goods, etc. It can absorb hundreds times as much water as its own weight and syneresis is hardly caused even when pressure is applied.

Demand for SAP has been increasing year by year as paper diapers are becoming popular in emerging countries and demand for adult diapers is increasing in advanced countries where the population is aging.

Upon the operation commencement of the new factory in May, 2016, Sumitomo Seika Chemicals will have 386,000 tons of SAP annual production capacity.

Other SAP makers in Japan are Nippon Shokubai and San-Dia Polymers among others.

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.

Butadiene Price Rebound in Asia

A Nikkei Newspaper article dated April 18th says that, “Price of butadiene, a petrochemical product used to make synthetic rubber, is increasing in Asian countries, and the spot price was recently around $1,380 per ton — more than 15% higher than in late March.”

Butadiene is hardly produced from shale gas derived ingredients but produced solely from naphtha derived ingredients.
Therefore, the production amount of butadiene tends to decrease if the use of shale gas increases.

However, compared with past years, the butadiene price still remains low and whether the rebound price will stay or not depends on the regain of demands for major applications such as synthetic rubber and ABS resin.

Butadiene Price Rebound in Asia

A Nikkei Newspaper article dated April 18th says that, “Price of butadiene, a petrochemical product used to make synthetic rubber, is increasing in Asian countries, and the spot price was recently around $1,380 per ton — more than 15% higher than in late March.”

Butadiene is hardly produced from shale gas derived ingredients but produced solely from naphtha derived ingredients.
Therefore, the production amount of butadiene tends to decrease if the use of shale gas increases.

However, compared with past years, the butadiene price still remains low and whether the rebound price will stay or not depends on the regain of demands for major applications such as synthetic rubber and ABS resin.

PVC Price Drop in Asia

According to a source from the traders, recently the price of PVC in Asia is showing a downward trend, falling to about 1,000 dollars per ton, which is the lowest since December of last year.

PVC is produced from ethylene derived from naphtha and chlorine derived from salt. The ethylene market is on a downward trend after its peak about 2 months ago. (Also refer to our post on March 29.)

PVC Price Drop in Asia

According to a source from the traders, recently the price of PVC in Asia is showing a downward trend, falling to about 1,000 dollars per ton, which is the lowest since December of last year.

PVC is produced from ethylene derived from naphtha and chlorine derived from salt. The ethylene market is on a downward trend after its peak about 2 months ago. (Also refer to our post on March 29.)


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