Factbox: Japan's petchems to keep normal run rates after state of emergency declaration

Singapore — Japanese petrochemical plants' operating rate is likely to remain at normal levels after the government announced a state of emergency in an effort to stop the spread of the coronavirus, or COVID-19, in the country.

The announcement impacts several areas in Japan, namely Tokyo, Kanagawa, Saitama and Chiba in the east as well as Osaka, Hyogo and Fukuoka in the west.

INFRASTRUCTURE

**As it is not a lockdown, transportation will continue as per normal, which will likely limit disruption of petrochemical product transport. As a result, any cuts in run rates due to this announcement are seen to be limited.

**Japan's refinery-grade propylene production will likely fall due to lower refinery operations amid a slow down in gasoline demand.

**Japanese steam crackers will continue to operate at normal rates, while some steam crackers are scheduled to shut for annual maintenance in the second-quarter.

**Japan's JXTG Nippon Oil & Energy plans to restart one of its naphtha-fed steam crackers in Kawasaki around late April after the completion its annual maintenance. The cracker, able to produce 404,000 mt/year of ethylene, was shut end-February for maintenance.

**Japan's Maruzen plans to shut its steam cracker in Chiba over May-June for annual maintenance. The cracker is able to produce 550,000 mt/year of ethylene.

**Japanese PVC plant operations have been reduced due to weak export demand and turnaround. PVC plant operations may remain below 100% in Japan on poor Indian demand.

**Rubber plant operations are seen slowing down in Japan amid the global shutdown of automobile factories.

PRICES

**Japan's domestic petrochemical product prices are expected to fall in the coming months in light of the decline in naphtha values as Japan's domestic prices are set based on a naphtha-linked formula.

**CFR India PVC fell $50/mt week on week to be assessed at $760/mt on Wednesday, the lowest since December 2015, amid bearish demand.

**CFR China butadiene dropped $30/mt day on day to be assessed at $450/mt on Wednesday, the lowest since January 2009, dragged lower by ample supplies.

TRADE FLOW

**Japan's propylene exports will likely decline amid lower production from refineries. In February, Japan's propylene exports sank 39% month on month to 44,624 mt, according to customs data.

**Japan's butadiene exports will likely increase in the coming months in line with lower downstream operations. Japan's butadiene exports in February was only 1 mt compared with 7,747 mt in January, according to the customs data.

**Japan will likely export lesser PVC in the coming months amid lower plant operations as well as weaker demand from India, which is under lockdown. According to the Vinyl Environmental Council, Japan's PVC exports in February stood at 57,244 mt, up 8.3% on the month.