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Japan's Eneos to close Chita petrochemical plant in Oct 2021

[TOKYO] Japan's biggest oil refiner Eneos Holdings Inc said on Tuesday it will stop production at its Chita petrochemicals plant in central Japan next October, citing a drop in local demand and fierce competition in Asia.

The Asian country's refining sector has been cutting capacity as it struggles to get business from a shrinking, ageing population that consumes less fuel because of more efficient vehicles and gasoline-electric hybrids.

"We have decided to end production at Chita as the plant is expected to stay in loss-making conditions due to slumping paraxylene market," Eneos Executive Vice-President Junichi Iwase said at a news conference.

Paraxylene, or PX, is a raw material for plastic bottles or synthetic fibre.

The production halt at the plant would reduce Eneos' paraxylene capacity by only 400,000 tonnes a year, leaving it with a total paraxylene output capacity of more than three million tonnes a year, Mr Iwase said.

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"By stopping production at Chita, which has relatively low competitiveness among our other plants, we aim to boost our overall competitiveness," Mr Iwase said.

Eneos said it will hold talks with rival Idemitsu Kosan to transfer some of its production facilities at the plant, including those for paraxylene, to Idemitsu.

"We will continue to review our production and supply structure to reflect changing environment," Mr Iwase told reporters, without elaborating further.

Eneos will retain all employees of Chita plant, he added.

The Covid-19 pandemic has also hammered fuel demand.

Eneos Chairman Tsutomu Sugimori said last week 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.

In August, Eneos President Katsuyuki Ota said it will hasten its transformation into a supplier of low-carbon energy and materials.


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