Review of Operations: Chlor-alkali

Message from the Senior General Manager

The products handled by this division are used in a variety of fields and are essential to the development of industry and society as well as for maintaining living standards. Looking ahead, demand is expected to increase overseas, beginning with Southeast Asia, and we will create a stable supply system by establishing and maintaining an optimal production system and logistics network that supports the development of each country.        

Takahiko Kamezaki
Senior Vice President
President, Chlor-alkali Group
Senior General Manager, Chlor-alkali Division

SWOT Analysis

Strengths

• Largest electrolysis facility in Japan with well-balanced production capacity for caustic soda and chlorine ensuring stable operations
• Competitive infrastructure at Nanyo Complex and other domestic manufacturing sites

Weaknesses

• Renovation costs associated with aging facilities
• Electricity-intensive industry

Opportunities

• Reduction of CO2 emissions using energy-saving technologies developed by Tosoh and licensing of such technologies
• Wide range of chlorine products that contribute to sanitation management, such as calcium hypochlorite
• Demand for PVC resin in Southeast Asia due to economic growth

Threats

• Contracting market for chlor-alkali products in Japan
• Soaring prices of raw materials and fuel

Review of Previous Medium-term Business Plan
We continued with full production and sales from our electrolysis plants by developing the infrastructure of sites in Japan. Despite instability in market conditions due to the COVID-19 pandemic from fiscal 2021, we were able to maintain stable production and supply through effective production and sales management. We also achieved our targets for both sales and operating income in the final year of the plan by passing on the higher cost of raw materials and fuel to product prices.   

Strategy Under New Medium-term Business Plan
Chlor-alkali products are used in a variety of fields and are vital for the advancement of industry and society and to maintain living standards. Caustic soda is essential for the production of cathode material for electric vehicle (EV) batteries, which can reduce the burden on the environment, and of aluminum, which helps to reduce the weight of automobiles and aircraft. This product is gaining importance amid the trend toward a decarbonized society. Tosoh aims to contribute to society and drive corporate advancement through the supply of high-quality products. In the Asian region, where demand for chlor-alkali products is expected to grow, we will continue making plans to create a new production line that covers from electrolysis to the manufacture of PVC with the aim of driving the advancement of the Tosoh Group.              

Message from the Senior General Manager
The Urethane Division handles a wide product range, from Commodity products such as methylene diphenyl diisocyanate (MDI) to R&D-based Specialty products. Tosoh’s concept of dual management is the focus of the division, with efforts taken to strengthen the foundation of Commodity products and thus ensure stable profits, while at the same time expand the lineup of Specialty products through ongoing investment in development. In recent years, environmental issues such as the reduction of GHG emissions have been in the spotlight and responding to these issues has become critical to ensure continued growth. We will conduct R&D into such areas as the effective utilization of CO₂ and biomass raw materials to contribute to the profitability of the Tosoh Group as well as the protection of the environment.         

Takafumi Kiuchi
Vice President
Senior General Manager, Urethane Division

SWOT Analysis

 Strengths

• Efficient integrated production system leveraging our vinyl isocyanate chain
• Lineup of products with distinctive functional capabilities
• R&D system able to respond to market needs

Weaknesses

• Business scale inferior to competitors
• Product mix dominated by isocyanates

Opportunities

• Strong growth in polyurethane market
• New social demands requiring environmental measures such as carbon neutrality
• Proximity to China, the largest market, and Southeast Asia and India, where demand is expected to grow in the future

Threats

• Gradual decline in polyurethane market due to emergence and increased competitiveness of other resins
• Intensifying competition due to further capacity expansion by competitors
• Cost increase due to stricter environmental regulations and deterioration of logistics situation
• Sharp fluctuations in prices of raw materials and fuels

Review of Previous Medium-term Business Plan
In order to stabilize and maximize profits, the Urethane Division worked to strengthen MDI sales in Japan and bolster functional urethanes. In addition to striving to increase profitability in MDI through reformulation, we strengthened our logistics system in Japan to enhance our supply capacity. Regarding our core functional urethane products, we are increasing production capacity and improving production efficiency as appropriate at multiple bases. This will serve to create a flexible and robust supply system for customers in Japan and overseas. At the same time, we will expedite the implementation of projects that have been delayed due to the COVID-19 pandemic and changes in the economic environment.   

Strategy Under New Medium-term Business Plan
The division will continue aiming to create a business structure that is less susceptible to market fluctuations. We will implement a business continuity plan that includes strengthening the logistics system, which is the foundation of the division, purchasing different kinds of raw materials and ensuring preventive maintenance of manufacturing equipment. We will also actively work on the development of environmentally friendly products, which are growing in importance, and isocyanate using CO₂ as raw material. For existing products, the division will expeditiously make the investments necessary to enhance our presence in the market. By integrating manufacturing, sales and research functions, we aim to respond to customer demands in a timely manner and create high-value-added products.