Kartik Kohli 2024-11-08 08:30:10
Sumitomo Chemical Co. has proposed to Maruzen Petrochemical Co., its joint-venture partner in Keiyo Ethylene Co. (Chiba, Japan), that Sumitomo reduce its offtake quotas from the JV. Sumitomo and Maruzen have also begun a joint evaluation of ways to use this proposal for a substantial operational optimization of Keiyo Ethylene.
The JV’s ethylene capacity is 768,000 metric tons per year. Maruzen owns a 55% stake in Keiyo Ethylene and Sumitomo has 45%. Sumitomo has about 59.4% of the product offtake ratio and Maruzen has the remaining 40.6%.
Sumitomo said it is implementing fundamental structural reforms to maintain its position as a company with a global presence, and that revitalizing the petrochemical business is one of its highest priorities. The company said that by advancing business restructuring, including collaborations with business partners, and “steering towards value creation using technologies that reduce environmental impact, Sumitomo Chemical will strive to strengthen the revenue base of its essential and green materials sector.”
In 2015, Sumitomo closed a 100%-owned ethylene plant at Chiba, which was the only steam cracker it operated there alone.
“Partners are restructuring their respective petrochemical businesses.”
Separately, Maruzen plans to explore ways to optimize production at its own Chiba ethylene plant, which has a capacity of 525,000 metric tons per year. It plans capacity reductions to strengthen profits at its basic chemicals business by improving operating rates and reducing fixed costs of its ethylene production units while reducing CO2 emissions. Maruzen operates crackers at Chiba and Yokkaichi, Japan, according to its website.
Maruzen said that in Japan’s petchem industry, the challenging business environment — characterized by global oversupply due to the construction of large-scale production units in China, as well as declining ethylene demand in Japan — has led to prolonged low operating rates at Japan’s ethylene production units. “Furthermore, active participation in and contribution to green transformation initiatives is required to achieve net-zero carbon,” it added.
Maruzen Petrochemical forms part of Cosmo Energy Group. According to Cosmo’s website, Maruzen has a total of 1.3 million metric tons per year of ethylene capacity, including the Chiba and Yokkaichi crackers, and Maruzen’s share of Keiyo Ethylene.
Producers in Japan are beginning to consolidate petchem production and are using the opportunity to expedite decarbonization. The sense of urgency is mounting due to oversupply, the energy transition, demand for sustainable products and processes, and China’s increasing self-sufficiency.
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