Japan's ethylene production has plummeted to levels not seen since 1987, totaling 4.98 million tonnes in 2024, according to the Japan Petrochemical Industry Association. This marks the first time in nearly four decades that production has fallen below the 5 million tonnes threshold. The decline in Japanese output is attributed to a contraction in domestic demand and a glut of production in China that is affecting global prices.
The Japan Petrochemical Industry Association, a key source of data on the country's petrochemical sector, highlights ethylene as a crucial component in plastics manufacturing. Despite its significance, the production of this essential chemical has reached multi-decade lows. The overproduction in China is a primary factor exerting downward pressure on ethylene prices, thereby impacting the competitiveness of Japanese producers.
Meanwhile, the steel industry in Japan is experiencing similar challenges. Steel production has reached its lowest point in decades, underscoring the broader issues confronting Japan's manufacturing sectors. While the steel industry has made strides in restructuring efforts, the chemical industry, including ethylene production, has lagged behind in adopting similar reforms.
The decline in both steel and ethylene production reflects broader economic trends and competitive pressures from international markets, particularly China. The oversupply situation originating from Chinese manufacturers has created an environment where Japanese producers struggle to maintain their market positions.