Japan Chemical Trading Blog

The latest chemical trading industry insights from Japan, Asia and the world, reported by the President of Daishin Corporation, Masa Oguchi.

A Nuclear Power Plant to Resume in Japan

In Japan, the great earthquake and tsunami that occurred on March 11, 2011 caused a catastrophic accident at the power plants in Fukushima.
With the accident as a trigger, approaches to the nuclear power generation in Japan have been reviewed and nuclear power plants had undergone periodic inspections after the earthquake stopped operation one by one.
Currently, all of existing 48 plants in Japan stopped.

Nuclear power plants were assessed for a year based on a new regulation standard established by the Ministry of Environment of Japan considering a more severe defense against natural disasters and terrorism.
As a result, the Sendai Nuclear Power Plant in Kagoshima Prefecture informally passed its inspection on July 16.
If the local community approves it smoothly, the plant is expected to resume operation around October this year.

A Nuclear Power Plant to Resume in Japan

In Japan, the great earthquake and tsunami that occurred on March 11, 2011 caused a catastrophic accident at the power plants in Fukushima.
With the accident as a trigger, approaches to the nuclear power generation in Japan have been reviewed and nuclear power plants had undergone periodic inspections after the earthquake stopped operation one by one.
Currently, all of existing 48 plants in Japan stopped.

Nuclear power plants were assessed for a year based on a new regulation standard established by the Ministry of Environment of Japan considering a more severe defense against natural disasters and terrorism.
As a result, the Sendai Nuclear Power Plant in Kagoshima Prefecture informally passed its inspection on July 16.
If the local community approves it smoothly, the plant is expected to resume operation around October this year.

LINE Applies to List on Tokyo Stock Exchange

On July 16, Nikkei Newspaper reported that an instant messaging app operator LINE Corporation applied for an initial public offering on the Tokyo Stock Exchange.

LINE is a Japanese subsidiary of NAVER Corporation, a South Korean IT company.
According to a relevant source, the company could be valued at more than JPY 1 trillion (about USD10 billion).

LINE aims to take more shares in foreign markets, including the North American market by investing funds acquired through the IPO.
Competition will be fiercer with competitors such as WhatsApp which Facebook acquired in February or Tencent in China.

LINE Applies to List on Tokyo Stock Exchange

On July 16, Nikkei Newspaper reported that an instant messaging app operator LINE Corporation applied for an initial public offering on the Tokyo Stock Exchange.

LINE is a Japanese subsidiary of NAVER Corporation, a South Korean IT company.
According to a relevant source, the company could be valued at more than JPY 1 trillion (about USD10 billion).

LINE aims to take more shares in foreign markets, including the North American market by investing funds acquired through the IPO.
Competition will be fiercer with competitors such as WhatsApp which Facebook acquired in February or Tencent in China.

Japan, the EU and the U.S. Investment in China Decreasing

According to the announcement of the Ministry of Commerce of the People’s Republic of China on June 15, investment by Japan, the EU and the U.S. in China is dropping.
In the January – June period of 2014, investment by Japan decreased by 48.8%, almost half.
The weaker yen and increased production costs such as local labor costs are considered to be background factors.

In the same period, investment by the U.S. decreased by 4.6%, the EU by 11.2% and ASEAN by 19.25%. In contrast, South Korea’s investment drastically increased by 45.6%.
While investment by Japan is sharply decreasing, investment by South Korea is sharply increasing.
Will this trend continue?

Japan, the EU and the U.S. Investment in China Decreasing

According to the announcement of the Ministry of Commerce of the People’s Republic of China on June 15, investment by Japan, the EU and the U.S. in China is dropping.
In the January – June period of 2014, investment by Japan decreased by 48.8%, almost half.
The weaker yen and increased production costs such as local labor costs are considered to be background factors.

In the same period, investment by the U.S. decreased by 4.6%, the EU by 11.2% and ASEAN by 19.25%. In contrast, South Korea’s investment drastically increased by 45.6%.
While investment by Japan is sharply decreasing, investment by South Korea is sharply increasing.
Will this trend continue?

Tellurium Price Increase

Tellurium is a rare metal used as the raw material cadmium telluride for thin-film solar cells, as well as for manufacturing Peltier device, optical lens and semiconductors.
Although solar cells made with cadmium telluride are often used in Europe and the U.S. because it is inexpensive, it is rarely used in Japan since it contains cadmium, which is a harmful substance.

The price dropped below USD100 per kg at the end of last year; however, since March this year, it started to rise and has now recovered to nearly USD130.
There is some positive news in the market such as the announcement by 5N Plus (Canada) on May 27 that it renewed an exclusive cadmium telluride delivery agreement, valid until 2019, with First Solar, one of world’s major solar panel manufacturers.
According to Japan Metal Bulletin on July 14, one of copper refinery in Japan stopped their supply recently and supply is getting shorted while the demand is stable.
Because tellurium was traded at the record high price of over USD400 3 years ago, some speculators point out that prices will keep rising. Price movements should be closely watched while monetary easing policies continue around the world.

Tellurium Price Increase

Tellurium is a rare metal used as the raw material cadmium telluride for thin-film solar cells, as well as for manufacturing Peltier device, optical lens and semiconductors.
Although solar cells made with cadmium telluride are often used in Europe and the U.S. because it is inexpensive, it is rarely used in Japan since it contains cadmium, which is a harmful substance.

The price dropped below USD100 per kg at the end of last year; however, since March this year, it started to rise and has now recovered to nearly USD130.
There is some positive news in the market such as the announcement by 5N Plus (Canada) on May 27 that it renewed an exclusive cadmium telluride delivery agreement, valid until 2019, with First Solar, one of world’s major solar panel manufacturers.
According to Japan Metal Bulletin on July 14, one of copper refinery in Japan stopped their supply recently and supply is getting shorted while the demand is stable.
Because tellurium was traded at the record high price of over USD400 3 years ago, some speculators point out that prices will keep rising. Price movements should be closely watched while monetary easing policies continue around the world.

Increase in Ethylene Price in Asia

According to an article in the Nikkei Newspaper dated July 12th, the “Spot price of ethylene has increased and is now approximately 1,520 USD/ton in East Asia, up 6% from a month ago”.

Ethylene is the most essential base ingredient for petrochemical products, and in Japan, it is produced through thermal decomposition of naphtha.
However, Japan is at a great disadvantage in price competition compared to some countries, including the U.S., where ethylene is produced from ethane that is obtained from shale gas.

The underlying reasons for the increase in price are that the supply quantity has decreased due to frequent periodic maintenance in ethylene plants in Asia and that the demand for ethylene has increased in China due to increase in production capacity of polyethylene derivatives.
There is also speculation that the export volume to Taiwan will increase due to production problems at a Taiwanese manufacturer.

Recently, the price difference between ethylene and naphtha has increased to over 500 USD/ton.
Since it would be difficult for Japanese companies in terms of structure to maintain long-term competitiveness, they need to promote capacity reduction in a planned way.

Increase in Ethylene Price in Asia

According to an article in the Nikkei Newspaper dated July 12th, the “Spot price of ethylene has increased and is now approximately 1,520 USD/ton in East Asia, up 6% from a month ago”.

Ethylene is the most essential base ingredient for petrochemical products, and in Japan, it is produced through thermal decomposition of naphtha.
However, Japan is at a great disadvantage in price competition compared to some countries, including the U.S., where ethylene is produced from ethane that is obtained from shale gas.

The underlying reasons for the increase in price are that the supply quantity has decreased due to frequent periodic maintenance in ethylene plants in Asia and that the demand for ethylene has increased in China due to increase in production capacity of polyethylene derivatives.
There is also speculation that the export volume to Taiwan will increase due to production problems at a Taiwanese manufacturer.

Recently, the price difference between ethylene and naphtha has increased to over 500 USD/ton.
Since it would be difficult for Japanese companies in terms of structure to maintain long-term competitiveness, they need to promote capacity reduction in a planned way.

Caustic Soda Price Increased in Japan

According to the Nikkei Newspaper on July 7, “the domestic price of caustic soda in Japan increased.
Paper companies, which are large consumers, began to accept higher price one and a half years after the first announcement of a price increase by manufacturers”.

Caustic soda is produced together with chlorine by electrolyzing saline water in the electrolytic soda industry and is used as alkali in wide a range of applications.
This news may surprise some people who are not familiar with the Japanese market, because the current international price of caustic soda is in a downward trend rather than increasing.

The price of caustic soda, whose unit price is inexpensive, can easily fluctuate merely because of domestic affairs since imported caustic soda cannot compete against the domestic product due to the import costs.
Electricity costs have been rising because of the shutdown of nuclear reactors after the Great East Japan Earthquake, and fuel prices have increased, caused by the weaker Japanese Yen: increased costs are finally reflected in the price of caustic soda several years down the line.

Caustic Soda Price Increased in Japan

According to the Nikkei Newspaper on July 7, “the domestic price of caustic soda in Japan increased.
Paper companies, which are large consumers, began to accept higher price one and a half years after the first announcement of a price increase by manufacturers”.

Caustic soda is produced together with chlorine by electrolyzing saline water in the electrolytic soda industry and is used as alkali in wide a range of applications.
This news may surprise some people who are not familiar with the Japanese market, because the current international price of caustic soda is in a downward trend rather than increasing.

The price of caustic soda, whose unit price is inexpensive, can easily fluctuate merely because of domestic affairs since imported caustic soda cannot compete against the domestic product due to the import costs.
Electricity costs have been rising because of the shutdown of nuclear reactors after the Great East Japan Earthquake, and fuel prices have increased, caused by the weaker Japanese Yen: increased costs are finally reflected in the price of caustic soda several years down the line.

Price Increase of Caprolactam

I mentioned in this weblog article on June 28 about the price increase of benzene. Now the price of caprolactam, which is derived from cyclohexane obtained through the hydrogenation of benzene, is also increasing.Caprolactam is used as a raw material for nylon.
In recent years, the price of caprolactam has been low due to a continuous production increase in China.

According to a Nikkei Newspaper article on July 4, Ube Industries, Ltd., the biggest caprolactam manufacturer in Japan with production facilities in Japan (Ube), Thailand, and Spain “offered to large-demand customers a price of USD2,375 a ton for the month of July, which was USD140 higher than the price for June”.Chinese manufacturers are also increasing their prices.
Recent rising crude oil prices have started to impact on prices of various products.

Price Increase of Caprolactam

I mentioned in this weblog article on June 28 about the price increase of benzene. Now the price of caprolactam, which is derived from cyclohexane obtained through the hydrogenation of benzene, is also increasing.Caprolactam is used as a raw material for nylon.
In recent years, the price of caprolactam has been low due to a continuous production increase in China.

According to a Nikkei Newspaper article on July 4, Ube Industries, Ltd., the biggest caprolactam manufacturer in Japan with production facilities in Japan (Ube), Thailand, and Spain “offered to large-demand customers a price of USD2,375 a ton for the month of July, which was USD140 higher than the price for June”.Chinese manufacturers are also increasing their prices.
Recent rising crude oil prices have started to impact on prices of various products.

Will the Population Decline in Japan Ever Stop?

According to a report made by the “Choosing the Future Committee”, a governmental investigative committee comprised of well-informed people, “presently, Japan is heading towards depopulation and being an aged society, and if we continue on this path, it is likely that the decrease in Japan’s population will be approximately 1 million annually 25 years from now (at present, the average is 160,000 annually), and the population will decrease to approximately 87 million in 2060 from the present 127 million, a drop to two-thirds the current number”.

According to the “Basic Policies for Economic and Fiscal Management and Reform 2014”, which was approved in a Cabinet meeting on June 24, the target of “keeping a stable demographic structure with a population of around 100 million in 50 years” has been set.

This is quite a high bar and although no specific measures are specified for attaining this goal, it is considered significant that the government has at least set a target.

In the future, it is expected that the government will come up with drastic and concrete measures before it becomes too late.

Will the Population Decline in Japan Ever Stop?

According to a report made by the “Choosing the Future Committee”, a governmental investigative committee comprised of well-informed people, “presently, Japan is heading towards depopulation and being an aged society, and if we continue on this path, it is likely that the decrease in Japan’s population will be approximately 1 million annually 25 years from now (at present, the average is 160,000 annually), and the population will decrease to approximately 87 million in 2060 from the present 127 million, a drop to two-thirds the current number”.

According to the “Basic Policies for Economic and Fiscal Management and Reform 2014”, which was approved in a Cabinet meeting on June 24, the target of “keeping a stable demographic structure with a population of around 100 million in 50 years” has been set.

This is quite a high bar and although no specific measures are specified for attaining this goal, it is considered significant that the government has at least set a target.

In the future, it is expected that the government will come up with drastic and concrete measures before it becomes too late.