Asahi, Adeka, Kaneka withdraw from Kashima chloro-alkali VCM JV
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Asahi, Adeka, Kaneka withdraw from Kashima chloro-alkali and VCM JV

4:27 AM, 19th December 2011
Asahi, Adeka, Kaneka withdraw from Kashima chloro-alkali and VCM JV

TOKYO, JAPAN: Asahi Glass, Adeka Corporation and Kaneka Corporation have decided to withdraw from Kashima chlorine and alkali and Kashima vinyl chloride monomer (VCM) at the end of March 2012.

Shin-Etsu Chemical plans to take over their equity holdings in the joint ventures, which have been suffering from low capacity utilizations in recent years and are expected to scrap their surplus capacities for 30 to 50 per cent reductions in capacity.

Japan’s PVC production had contracted 27 per cent over the past decade. In 2010 production was 1.69 tonne, translating into an average operating rate of 75.4 per cent for the industry, down more than 10 per cent points over five years. The operating rates of the two joint ventures had been stuck at 50 to 60 per cent, with virtually all their chloro-alkali products and VCM output supplied to Shin-Etsu.

Chloro-alkali plants co-produce caustic soda and chlorine in an energy-intensive process, and the disaster had delivered a one-two punch, slashing demand for caustic soda, which Kashima Chlorine had been partially supplying to northeast Japan for papermaking, while raising the cost of electricity, by shutting down nuclear power generation in nearby Fukushima Prefecture. The three withdrawing partners have agreed to bear their costs of repairing quake-damaged facilities and scrapping surplus capacities.

Mitsubishi Chemical, the complex’s cracker operator, previously discontinued its production of styrene monomer in the complex and has been exporting the freed-up ethylene output under a five-year, yen-denominated contract. The present change will not change the ethylene supply-demand balance in the complex since the joint ventures produce in proportion to Shin-Etsu’s offtake. But industry sources see no guarantee in Shin-Etsu continuing to take VCM from Kashima vinyl amid, the decline in domestic demand for PVC, which is the world’s biggest PVC maker.

© WOC News

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