Review of Operations: Petrochemical

Net Sales

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Olefins

Shipments of propylene and cumene increased due to a recovery in demand and elevated production volumes. Moreover, higher prices for raw materials and fuels and improved conditions in markets overseas led to an increase in product prices.  

Polymers

Shipments of polyethylene resin increased both in Japan and overseas as demand rebounded. Likewise, shipments of chloroprene rubber increased in both domestic and export markets, and product prices rose. 

Operating Income

Operating income increased due to higher shipments of a broad range of products and to rising prices of raw materials and fuels such as naphtha, which positively impacted the difference between product receipts and payments.

  • Olefins

    Message from the Senior General Manager
    In collaboration with a well-balanced and robust derivative chain, we aim to expand our value-added product line by selling each fraction produced by our naphtha cracker and using them more effectively. In order to secure stable profits in a changing business environment, we will strengthen our competitiveness by pursuing the diversification of raw materials and the improvement of naphtha cracker efficiency. In addition, we aim to explore and deepen our business by setting targets for each product line, with sales, R&D, and manufacturing working together with a focus on information sharing.

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    Hidetoshi Horiuchi
    Vice President
    Senior General Manager, Olefins Division

    SWOT Analysis

    Strengths

    • Sole owner of a naphtha cracker in the Chukyo region
    • Stable demand for derivatives
    • Agility through ownership of ethylene carrier

    Weaknesses

    • Easily impacted by changes in demand for derivatives
    • Easily impacted by price fluctuations of raw materials and fuels
    • Increase in maintenance costs due to aging of facilities

    Opportunities

    • Strong demand growth in Asia
    • Further downstream development (M&A related to derivatives)
    • Response to carbon neutrality

    Threats

    • Economic slowdown, declining demand and supply chain disruptions due to COVID-19 pandemic
    • Unexpected influx of petrochemical products from China
    • Demand and price fluctuations due to geopolitical risk

    Review of Previous Medium-term Business Plan
    We worked to strengthen the competitiveness of our naphtha cracker from 2018 to 2020 by streamlining facilities through the installation of new gas turbines and a new cracking furnace as well as by upgrading the existing cracking furnace. Although the first half of fiscal 2020 was impacted by a sharp drop in raw material prices and a decline in demand, mainly in the automobile sector, owing to the COVID-19 pandemic, the naphtha cracker was in high operation the rest of the time as we worked to supply raw materials to meet demand for derivatives.  

    Strategy Under New Medium-term Business Plan
    To further strengthen the foundation of our Commodity business, we will work to improve cost competitiveness and stabilize operations of our naphtha cracker, while deepening our Petrochemical business by integrating production, research, and sales linked with demand for derivatives. We intend to augment our lines of value-added products through the sale and effective use of each fraction produced by our naphtha cracker in collaboration with a robust derivative chain. We will also create a system enabling us to secure profits even in a changing environment.

  • Polymers

    Message from the Senior General Manager
    The environment surrounding the polymer business is facing a major turning point amid the global trend toward a plastic-free society. Against this backdrop, we are leveraging the advantages of our plants in handling multi-item and small-lot production to supply products that meet customer needs. We will also continue to accelerate the development of technology for environmentally friendly products. By enhancing our products in line with the functions and applications of plastics that are indispensable to daily life, and by providing eco-conscious products, we can continue contributing to society going forward.          

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    Hideaki Nishioka
    Vice President
    Senior General Manager, Polymers Division

    SWOT Analysis

    Strengths

    • Lineup of high-quality products that meet a wide range of needs
    • Stable production system based on Tosoh-produced raw materials
    • World’s only manufacturer of chlorosulphonated polyethylene (CSM) in the high-end
      market

    Weaknesses

    • Small-scale plants
    • High plant maintenance costs

    Opportunities

    • Stable domestic market and expanding demand overseas
    • Need to respond to the needs created by the shift to electric vehicles (EVs) and high-speed communications
    • Rising environmental awareness and development of related materials

     Threats

    • Increase in production capacity of overseas competitors of raw materials derived from shale gas (North America) and naphtha (Asia)
    • Decline in demand due to deplasticization and shift to bioplastics.
    • Concerns over stable procurement of raw material due to geopolitical risks

    Review of Previous Medium-term Business Plan
    We worked to steadily strengthen business foundations in order to meet customer needs by continuing to pursue the aim of providing differentiated and high-value-added products and to debottleneck production of chloroprene rubber. Demand for products decreased due to a decline in the flow of people amid the global economic slowdown and turmoil due to the COVID-19 pandemic. For products experiencing tight supply and demand such as in the medical field and food industry, production and sales departments worked together to meet the supply requirements of customers. 

    Strategy Under New Medium-term Business Plan
    We will maximize the capabilities of our plants to handle a wider variety of products and small-lot production and further promote differentiation and high added value. From an environmental perspective, particularly in the area of becoming plastic-free, we will accelerate the development of products that use less polyethylene plastic as well as products that contribute to material recycling, with the aim of promoting rapid market development.

    Where plastic cannot be readily replaced in products, we will look to enhance their functionality and expand our lineup to meet customer needs. We will strive to establish a stable supply system in order to satisfy needs based on planned investments aimed to raise capacity.