Earthquake Causes Japan's Decline in Production

Sinochem New Network News On March 11th, a magnitude 9.0 earthquake struck Japan, destroying facilities such as electricity, transportation, and oil refineries, and shutting down the aromatics plant resulted in a significant reduction in production. As of March 14th, JX Corporation of Japan located in Sendai, Kashima and Negishi aromatics plants and refineries were closed, with a total production capacity of nearly 450,000 tons, directly shaking the international market. FOB Korea ** spot closing 1174 on the afternoon of the earthquake. The US dollar (ton price, the same below) rose by 33 US dollars, or almost 3%. On March 14th, the close again climbed to 1,183 dollars, and on May 15, the ** closing price also rose to more than 1,200 US dollars. The weakening Chinese market has also stabilized, and traders have begun to actively purchase.

Japan is the third largest oil refining country in the world, and ** production is also among the top three. Moreover, most of Japan’s exports to Asia and Europe and the United States have played a pivotal role in Asia and even the entire international market. The earthquake caused the destruction of aromatics and the direct reduction in production capacity accounted for more than 10% of Japan's total domestic capacity. According to the latest news, Japan's equipment supply is tight, and the operating rate of the refinery around Tokyo is also less than 60%. In addition, Japan's power supply system has been damaged and the power supply capacity has been reduced, which has reduced the production of **. Japan, as the world's leading exporter, will not be able to recover its exports in the short term because of the impact of transportation and electricity. It is expected that the output of the country will fall to about 20% of its total output in the short term, and it will ease the oversupply in Asia in the short term. The problem.

Affected by the continuous warming of the international market, the Chinese market, which has entered the adjustment and weakening, has also begun to stabilize. Due to the declining supply capacity in the Asian market caused by the earthquake, the negative attitude of the market in March has also begun to change in the previous period. With the uncertainty of the quantity of production cuts in Japan in the later period, most manufacturers or traders are holding tight expectations for the Asian supply. According to the view, the number of inquiries began to increase, the prices also stabilized, and the prices of low-end prices in some regions moved up. Although the downstream demand in the domestic market has not been effectively enlarged, domestic availability will inevitably decline with the delivery of international favorable information, as well as the implementation of domestic **sources and the implementation of export plans. Therefore, China's exports of pure benzene, domestic demand and other aspects in the near future will have a rapid adjustment process, forming a new balance between supply and demand.

It is also known that the earthquake in Japan also caused a lot of styrene plant shutdowns in the earthquake area and it is unlikely that recovery will occur in the short term. Affected by this, China's styrene business is expected to increase its purchase of pure benzene. Domestic PetroChina and Sinopec, both large benzene producers, have only a few inventory sources. Coupled with an increase in the balance of exports, the stabilization of the domestic market has stabilized. And from the mid-later period, the domestic downstream demand growth is stable, and there is still a chance for further growth.