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.

Mitsui Chemicals of Japan and SKC of Korea to Consolidate Polyurethane Material Businesses

On December 22, Mitsui Chemicals, Inc. (MCI) announced the signing of a joint venture agreement to consolidate the polyurethane material businesses of MCI and SKC Co., Ltd. (SKC).
The consolidated company is going to be established in South Korea around April 2015, expecting the sales of USD1,5 billion per year.

Polyurethane is a collective name for polymers that have a urethane bond (-NH・CO・O-) and the major applications of polyurethane foam include automobile seats and heat insulating materials.
The size of the global market is around 10 trillion Japanese Yen (aprox. USD ten billion) per year.

MCI has already decided to stop polyurethane material production at its TDI plant in Kashima and MDI plant in Omuta in 2016 due to declining earnings under the depressed market conditions caused by large-scale addition of facilities in China.
MCI and SKC intend to maximize the synergy effects by establishing a joint venture in South Korea with an ownership of 50% each.
I hope that MCI will be able to improve its financial standing through a series of structural reforms.

Mitsui Chemicals of Japan and SKC of Korea to Consolidate Polyurethane Material Businesses

On December 22, Mitsui Chemicals, Inc. (MCI) announced the signing of a joint venture agreement to consolidate the polyurethane material businesses of MCI and SKC Co., Ltd. (SKC).
The consolidated company is going to be established in South Korea around April 2015, expecting the sales of USD1,5 billion per year.

Polyurethane is a collective name for polymers that have a urethane bond (-NH・CO・O-) and the major applications of polyurethane foam include automobile seats and heat insulating materials.
The size of the global market is around 10 trillion Japanese Yen (aprox. USD ten billion) per year.

MCI has already decided to stop polyurethane material production at its TDI plant in Kashima and MDI plant in Omuta in 2016 due to declining earnings under the depressed market conditions caused by large-scale addition of facilities in China.
MCI and SKC intend to maximize the synergy effects by establishing a joint venture in South Korea with an ownership of 50% each.
I hope that MCI will be able to improve its financial standing through a series of structural reforms.

Bismuth Price Drop

Recently we often hear about price drops, and today’s story is about bismuth.

Bismuth is a metal with a silver gray color, and because its melting point is 271.5 ºC, low as a metal, it is used as a low melting point alloy.
Recently, the demand of bismuth as a substitute for lead such as lead-free soldering material is increasing.

The major index in Europe, Metal Bulletin price has greatly dropped to USD10 per kg from the level of USD12 per kg in September-October.
This is from the downfall trend in crude oil and other nonferrous metals prices.

The increase of the bismuth stock at the Chinese rare metals stock exchange “The Fanya Metal Exchange” to exceed China’s annual consumption is also considered to be one of the causes, and in addition to that, the rumor that the Chinese Government authority carried out an on-site inspection at the Fanya Exchange in the middle of November also possibly influenced the market psychology.

Bismuth Price Drop

Recently we often hear about price drops, and today’s story is about bismuth.

Bismuth is a metal with a silver gray color, and because its melting point is 271.5 ºC, low as a metal, it is used as a low melting point alloy.
Recently, the demand of bismuth as a substitute for lead such as lead-free soldering material is increasing.

The major index in Europe, Metal Bulletin price has greatly dropped to USD10 per kg from the level of USD12 per kg in September-October.
This is from the downfall trend in crude oil and other nonferrous metals prices.

The increase of the bismuth stock at the Chinese rare metals stock exchange “The Fanya Metal Exchange” to exceed China’s annual consumption is also considered to be one of the causes, and in addition to that, the rumor that the Chinese Government authority carried out an on-site inspection at the Fanya Exchange in the middle of November also possibly influenced the market psychology.

Benzene Price Drop

According to the announcement dated December 5 made by JX NIPPON OIL & ENERGY CORPORATION, Asia’s price leader, the contractual price of benzene for December for Asia was settled at USD885 per ton, down by USD210 from the previous month.

This drop in the benzene price is observed as a matter of course considering the historic decline in the crude oil price.
As expectation increases that demand will decrease and the price will drop in the Asia region, the market price in the near term seems to be further weakening and the price has become the lowest in these 4 years.

Benzene Price Drop

According to the announcement dated December 5 made by JX NIPPON OIL & ENERGY CORPORATION, Asia’s price leader, the contractual price of benzene for December for Asia was settled at USD885 per ton, down by USD210 from the previous month.

This drop in the benzene price is observed as a matter of course considering the historic decline in the crude oil price.
As expectation increases that demand will decrease and the price will drop in the Asia region, the market price in the near term seems to be further weakening and the price has become the lowest in these 4 years.

Butter Shortage

It may be surprising to our readers from outside Japan, but recently, the whole of Japan has faced a butter shortage.
If you go to a supermarket in Japan, you often find butter is out of stock, or it is sold at a price considerably higher than before.

There are several direct reasons that led to this problem: the decrease in the number of dairy farmers due to the aging of dairy farmers and the lack of successors because it is difficult to secure profits in the dairy business, and the reduction of raw milk production due to last summer’s fierce heat that affected the health of dairy cattle in Hokkaido, i.e., the rampant of mastitis and the decrease in the number of pregnant cows caused by this disease.

However, it seems that the butter shortage will be alleviated soon because the Ministry of Agriculture, Forestry and Fisheries of Japan urgently imported 7,000 tons of butter in May 2014, and sold it to dairy manufacturers by the end of November.
Thus, the Christmas season butter demand is expected to be covered. Putting aside the discussion on the pros and cons for import regulations imposed on dairy products for the purpose of protection of national dairy farmers, the Ministry of Agriculture, Forestry and Fisheries, whose policy allowed the butter shortage problem to grow until it was actualized in the consumer market, should reflect upon the consequences.

In Japan, an administrative agency under the jurisdiction of the Ministry of Agriculture, Forestry and Fisheries exclusively imports butter.

Butter Shortage

It may be surprising to our readers from outside Japan, but recently, the whole of Japan has faced a butter shortage.
If you go to a supermarket in Japan, you often find butter is out of stock, or it is sold at a price considerably higher than before.

There are several direct reasons that led to this problem: the decrease in the number of dairy farmers due to the aging of dairy farmers and the lack of successors because it is difficult to secure profits in the dairy business, and the reduction of raw milk production due to last summer’s fierce heat that affected the health of dairy cattle in Hokkaido, i.e., the rampant of mastitis and the decrease in the number of pregnant cows caused by this disease.

However, it seems that the butter shortage will be alleviated soon because the Ministry of Agriculture, Forestry and Fisheries of Japan urgently imported 7,000 tons of butter in May 2014, and sold it to dairy manufacturers by the end of November.
Thus, the Christmas season butter demand is expected to be covered. Putting aside the discussion on the pros and cons for import regulations imposed on dairy products for the purpose of protection of national dairy farmers, the Ministry of Agriculture, Forestry and Fisheries, whose policy allowed the butter shortage problem to grow until it was actualized in the consumer market, should reflect upon the consequences.

In Japan, an administrative agency under the jurisdiction of the Ministry of Agriculture, Forestry and Fisheries exclusively imports butter.

Japan’s Trade Deficit Expected to Be Reduced in 2015

On December 4, the Japan Foreign Trade Council, comprising Japanese trading companies, announced its forecast for Japan’s trade deficit for fiscal 2015 to be about 10.5 trillion Japanese yen (approx. USD a hundred and five billion).
This is a slight improvement against the forecast for fiscal 2014, which was about 11.7 trillion Japanese yen.
Yet the trading balance is in a permanent deficit trend, with 7 trillion Japanese yen for fiscal 2012 and 11.5 trillion Japanese yen for fiscal 2013.

The suspension of nuclear power generation has led to increased imports of mineral fuels (coal, oil and LNG). However, the observed increase is just 3-4 trillion Japanese yen, and it can be said that the Japanese trade deficit is a structural change.

In this respect, Japan seems to be following the path of the former British Empire, or that of the current USA. Being scarce in natural resources and having the world’s worst government debt compared to GDP ratio, this is an issue that cannot be ignored.
It is important to abolish unnecessary regulations and to attract direct foreign investments to Japan. Nevertheless, as an export company, we think it is ideal if more excellent products that are able to enrich the lives of people around the world are developed in Japan, and by delivering them outside Japan, will increase exports from Japan.

Japan’s Trade Deficit Expected to Be Reduced in 2015

On December 4, the Japan Foreign Trade Council, comprising Japanese trading companies, announced its forecast for Japan’s trade deficit for fiscal 2015 to be about 10.5 trillion Japanese yen (approx. USD a hundred and five billion).
This is a slight improvement against the forecast for fiscal 2014, which was about 11.7 trillion Japanese yen.
Yet the trading balance is in a permanent deficit trend, with 7 trillion Japanese yen for fiscal 2012 and 11.5 trillion Japanese yen for fiscal 2013.

The suspension of nuclear power generation has led to increased imports of mineral fuels (coal, oil and LNG). However, the observed increase is just 3-4 trillion Japanese yen, and it can be said that the Japanese trade deficit is a structural change.

In this respect, Japan seems to be following the path of the former British Empire, or that of the current USA. Being scarce in natural resources and having the world’s worst government debt compared to GDP ratio, this is an issue that cannot be ignored.
It is important to abolish unnecessary regulations and to attract direct foreign investments to Japan. Nevertheless, as an export company, we think it is ideal if more excellent products that are able to enrich the lives of people around the world are developed in Japan, and by delivering them outside Japan, will increase exports from Japan.

Moody Downgraded the Japanese Government Bonds

On December 1, The American credit rating company, Moody’s, announced the downgrade of the credit rating for Japanese government bonds by one level, from Aa3 to A1, considering that Japan’s financial reconstruction has become even more difficult due to Japan’s negative economic growth in the July-September period that marked negative growth for two successive quarters, and Abe Cabinet postponing the second consumption tax increase.

On the following day, on December 2nd, it cut its ratings of five Japanese banks and two life insurance companies (Nissay and Sony Life) that hold large amounts of Japanese government bonds.

With these events, the rating of Japanese government bonds becomes one level lower than China, South Korea and Saudi Arabia, and on the same level as the Czech Republic and Estonia.

Of course. I think that leaving debt to the future generation is a cowardly act.

Moody Downgraded the Japanese Government Bonds

On December 1, The American credit rating company, Moody’s, announced the downgrade of the credit rating for Japanese government bonds by one level, from Aa3 to A1, considering that Japan’s financial reconstruction has become even more difficult due to Japan’s negative economic growth in the July-September period that marked negative growth for two successive quarters, and Abe Cabinet postponing the second consumption tax increase.

On the following day, on December 2nd, it cut its ratings of five Japanese banks and two life insurance companies (Nissay and Sony Life) that hold large amounts of Japanese government bonds.

With these events, the rating of Japanese government bonds becomes one level lower than China, South Korea and Saudi Arabia, and on the same level as the Czech Republic and Estonia.

Of course. I think that leaving debt to the future generation is a cowardly act.