MOSCOW (MRC) -- Japan's biggest oil refiner Eneos Holdings Inc said last Tuesday it planned to stop production of petrochemical products at its Chita plant in central Japan in October next year, said the company in its press release, citing falling local demand and stronger competition in Asia.
The company will hold talks with rival Idemitsu Kosan Co Ltd to transfer some of its production facilities at the plant, including those for paraxylene (PX), to Idemitsu, it said in a statement.
The end of production at the Chita plant would reduce Eneos' PX capacity by 400,000 tonnes a year, leaving it with a total paraxylene output capacity of more than three million tonnes a year, Eneos executive vice president Junichi Iwase said.
"We will continue to review our production and supply structure to reflect changing environment," Iwase told reporters in Tokyo, without elaborating further.
Eneos plans to keep all employees of Chita plant through transfer to other locations, he added.
Four of Japan's biggest refiners have merged into two in recent years and cut operations as they seek business from a shrinking, aging population that consumes less fuel because of more efficient vehicles and gasoline-electric hybrids.
The COVID-19 pandemic has piled on the pressure, collapsing fuel demand, especially in jet fuel.
Eneos Chairman Tsutomu Sugimori said a week earlier that demand of crude products could decline more rapidly than it had anticipated as a result of the pandemic and refiners would need to think about their production capacity and structure to reflect the change.
Eneos, formerly JXTG, unveiled last year its long-term strategy with an assumption that domestic oil demand would halve by 2040, or fall 2% annually.
As MRC reported earlier, Eneos Corp, permanently shut the 115,000 barrels-per-day (bpd) crude distillation unit at its Osaka refinery on September 30 as planned. The refiner, which was formerly known as JXTG Nippon Oil & Energy Corp and is now under Eneos Holdings Inc, is shifting its joint venture with PetroChina Co to Eneos’ Chiba refinery after shutting the venture’s Osaka refinery.
PX is a feedstock for the production of purified terephthalic acid (PTA). PTA is used to produce polyethylene terephthalate (PET), which, in its turn, is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.
According to ICIS-MRC Price report, consumption of PET chips by Russian converters decreased in October, which is generally in line with the current season. Market participants reported weak demand in the Russian PET chips market at the end of last month and expect its further decline in early November. The revival of the domestic PET market is expected in the second half of November, before the New Year holidays.
Eneos Holding (formerly known as JXTG) is Japan's largest oil company. Its activities include the exploration, import and refining of crude oil; production and sale of petroleum products (ethylene, propylene, butadiene, styrene, paraxylene, orthoxylene, etc.), including fuels and lubricants. In recent years, the company has been expanding its production facilities in other countries. Its products are sold under the ENEOS brand. On June 25, 2020, JXTG, founded in April 2017 after the merger of two Japanese companies, JX Holding and TonenGeneral, changed its name to Eneos Holdings, while its subsidiary JXTG Nippon Oil & Energy changed its name to Eneos.
MRC