Who is posing a challenge to the Japanese petrochemical industry?

The chairman of the Petroleum Association of Japan (PAJ), Shunichi Kito, highlighted the need for the industry to strengthen itself in the face of increasing competition from new petrochemical complexes in China and the Middle East.

Shunichi Kito, Chairman of the Petroleum Association of Japan (PAJ)

Kito stated that the operating landscape for petrochemical equipment in Japan is expected to face numerous challenges due to the upcoming operation of these new complexes. He emphasized that Japanese petrochemical companies, struggling with revenue difficulties, may face worsening conditions for the export of olefins like ethylene.

As a result, Kito believes that industry consolidation, efficiency improvement, and streamlined production operations will become urgent priorities.

Despite a global glut in the petrochemical market and weak economic growth affecting consumer demand, China continues to ramp up its petrochemical capacity, potentially impacting global profit margins until 2024.

In terms of Japan’s energy mix, coal-fired power plants accounted for 30.8% of the country’s total electricity generation in the fiscal year 2022-2023.

Gas power plants represented 33.7% of the energy mix, while nuclear power accounted for only 5.6% due to the aftermath of the Fukushima disaster in 2011.

Solar energy played a significant role in Japan’s renewable energy development, contributing 21.7% of total electricity output during the same period.

Japan aims to reduce the proportion of coal and natural gas in its energy structure to 19% and 20% respectively by 2030-2031, while increasing the share of nuclear and renewable energy to 20-22% and 36-38% respectively.

Consequently, Japan strongly opposes completely phasing out coal power by 2030.