Asahi Kasei Consolidates Naphtha Cracker in Mizushima and Restructures Petrochemical Operations in Japan

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Researched by Industrial Info Resources (Sugar Land, Texas)--Asahi Kasei Chemicals Corporation (Tokyo, Japan) plans to consolidate the naphtha cracker in Mizushima Industrial Zone (Kurashiki, Japan) with a neighboring plant, which is owned and operated by Mitsubishi Chemical Corporation (TSE:4010) (Tokyo, Japan), by April 2016. Asahi Kasei Chemical, a subsidiary of Asahi Kasei Corporation (TSE:3407) (Tokyo), also announced that it will restructure its domestic petrochemical operations to stabilize domestic demand and to strengthen competitiveness, due to current market conditions.

Asahi Kasei and Mitsubishi Chemical agreed to consolidate their naphtha crackers that are operating in Mizushima into one unit. The naphtha crackers are operated by Nishi Nippon Ethylene Limited Liability Partnership (Tokyo). But Asahi Kasei and Mitsubishi Chemical plan to dissolve Nishi Nippon Ethylene and establish a joint venture to operate and manage the naphtha cracker.

Each of the naphtha crackers has a capacity of 500,000 tons per year. Asahi Kasei will shut down and decommission its naphtha cracker. The companies will then increase the production capacity of the remaining unit from 500,000 tons to 570,000 tons per year. The cost for is estimated to be $180 million (181 billion yen).

Asahi Kasei also announced plans to restructure its petrochemical operations in Japan as a result of domestic market conditions and competition from low-cost imports.

Currently, Asahi Kasei produces 1.21 million tons per year of acrylonitrile in Japan and overseas. Domestic production capacities are 450,000 tons per year, including the 150,000-ton-per-year plant at Kawasaki (Kawasaki, Kanagawa) and the 300,000-ton-per-year plant at Mizushima. Asahi Kasei will close the acrylonitrile production unit in Kawasaki by August. Mizushima's 200,000-ton-per-year acrylonitrile unit will remain in operation, but its 100,000-ton unit will be concentrated on other products.

Asahi Kasei also plans to close the older, 320,000-ton-per-year styrene unit at Mizushima by March 2016.

Mizushima currently produces 710,000 tons per year of styrene monomers for the domestic market and for exports to Asia. However, due to current market trends, the facility will refocus production for the domestic market. The aim is to reduce risks that are associated with the fluctuations in the Asian markets.

Asahi Kasei's acrylonitrile-butadiene-styrene (ABS) business will divert to producing styrene-acrylonitrile (SAN) resin compounds at Kawasaki and to compounding the ABS copolymer procured from outside. Also, the company will close the 65,000-ton-per-year ABS production unit at Mizushima.

Asahi Kasei said it will close its styrene-butadiene latex (SB Latex) production unit at Mizushima by December 2015 and consolidate production at its Kawasaki facility. The SB Latex business currently produces 600,000 tons per year, including 36,000 tons at Kawasaki and 24,000 tons at Mizushima.

Finally, Asahi Kasei will close its 37,000-ton-per-year epoxy resin production unit at Mizushima by May 2015, which will allow the company to focus on high-end products, such as Novacure, which is produced at its plant in Fuji, Shizuoka.

Asahi Kasei will post an extraordinary loss of approximately $180 million (18 billion yen) for the fourth quarter of fiscal 2013. It has revised its net income forecast for fiscal 2013 to about $640 million (65 billion yen).

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