|
|
 |
|
Viewing report
|
|
|
|
Japan Petrochemicals Report 2012
Business Monitor International, Nov 2011, Pages: 66
Business Monitor International's Japan Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Japan's petrochemicals industry.
The March 2011 earthquake is set to change the Japanese chemicals and petrochemicals industry, and may offer an opportunity for further restructuring and streamlining of the industry so it is better able to raise efficiency and profitability.
Over the short to medium term, the role of the Japanese chemicals industry will be to supply materials for reconstruction. This should bolster output of PVC and other construction-related materials. While industrial consumers of chemicals such as the automotive and consumer goods sectors endured a severe disruption in supply, BMI believes a recovery should be underway in H112. The earthquake will reshape the industry over the long term, although it is unlikely to reduce the strength of the sector. Rebuilding and investment could lead to improved competitiveness with the replacement of facilities and with higher value speciality products. This will accelerate a process that began with the rationalisation of capacity over recent years. One focus will be alternative sources of electricity generation, such as solar and wind power, since the process of rebuilding nuclear facilities is likely to be lengthy.
The chemicals industry may benefit from restructuring, even if high volume commodities production is sacrificed for the sake of high technology speciality and high performance products. Japanese chemical manufacturers are increasingly exiting unprofitable businesses, pursuing business in highly functional and high value-added products, and strengthening competitiveness through business alliances and similar initiatives overseas. At the same time, Japanese petrochemicals majors are turning their attention to production activities in emerging markets, particularly Saudi Arabia, China, Singapore and Thailand. Japan has plenty of capacity to cater to its own requirements. However, any power outages will hit downstream producers through the supply chain. China would be able to fill the void with cheaper basic chemical products, ultimately limiting the opportunities available to other Asian producers to take advantage of Japanese reconstruction.
On the downside, there is a danger that end users may shift to foreign suppliers if domestic producers are unable to supply materials, although this effect is likely to be limited. Three factors will determine the long-term impact: the pace of recovery; whether producers choose to use the disaster as an opportunity to shift production abroad; and the strength of Japanese economic recovery. The weak domestic demand in Japan in the immediate aftermath of the earthquake was compensated by strong demand from China, which helped support the financial results of many Japanese producers. Increasing sophistication within the Chinese petrochemicals industry promises new opportunities for Japanese firms, which may invest in Chinese plants that manufacture higher performance products rather than restart operations in Japan. Japanese manufacturers are now seeking a way to capture market share and the increasing demand that is mainly coming from the high-end automakers and the electronics industries.
The main risks going into 2012 include the slowdown in Chinese growth, the effects of credit restriction and unemployment on US demand, the gloomy outlook for the European market and the strength of the yen against the currencies of Japan’s main trading partners. At the same time, the shift in petrochemicals growth to the Middle East, particularly with the start-up of large-scale projects in Saudi Arabia, is leading to a saturation of the Asian market.
Japan is at the top of BMI’s Petrochemicals Business Environment Ranking for Asia with 79.3 points, down 0.3 points from the previous year due to a decline in capacity in country risk scores in the aftermath of the earthquake. The gap between Japan and China has narrowed from 1.1 points to just 0.3 points as China’s petrochemicals industry surges ahead, but Japan is still ahead in terms of market and country risks, making it a safer investment prospect. Japan has a regulatory structure that is conducive to investment. The key problems for Japan are the cost of production and a slowdown in key markets, but the country retains major advantages, particularly in research and development, and consolidation has helped streamline and improve efficiency and integration within the industry.
Product samples
A sample for this product is available. Please Login/Register to download this sample.
|
|
|
|
