TOKYO - Effective July 21, Asahi Chemical Industry Co. reduced its output of polystyrene by 50 percent while increasing the price by 10 yen per kilogram, or about 4 cents a pound. Asahi clients were notified of the price increase at the end of June. According to Asahi Chemical spokesman Norio Sako, the moves are a process of ``adjusting between supply and demand in the face of inventory build-up.'' Since April, Sako said, production has been reduced gradually, starting with an initial cut of 20 percent.
Asahi, based in Tokyo, produces PS at three plants in Japan with combined production capacity of about 837 million pounds. Asahi's 50 percent cut will reduce total domestic PS capacity by nearly 20 percent.
Much of the PS produced in Japan is used by manufacturers of appliances, but the strong yen has moved production of televisions, air conditioners and other household appliances to lower-cost manufacturing centers in Southeast Asia, slowing domestic demand for PS resin.
At least one Japanese plastics firm is taking advantage of the westward migration of Japanese manufacturing.
Osaka-based Sekisui Plastics has acquired an 81 percent share in a producer of expanded polystyrene foam in Singapore from Norwegian chemical firm Dyn Industrier APA. Terms were not disclosed.
The Singaporean company, Dynopor Pte. Ltd., which had sales of about $30 million last year, employs 40 and has a production capacity of about 50 million pounds. During the next two to three years Sekisui plans to expand capacity at the plant to 77 million pounds.
Besides Sekisui's majority stake, 9.5 percent will be held by Osaka-based trading giant Sumitomo Corp. and 9.5 percent by its local subsidiary Sumitomo Singapore.
According to general manager Moshige Hayashi in Sekisui's International Department in Tokyo, the deal came together largely because of long-term relationships between the companies involved.
Sumitomo has a well-established relationship with Dyno in Norway, while Sekisui has long been doing business with Dynopor in Singapore.
EPS foam is enjoying strong demand in Southeast Asia, mainly because Japanese firms have moved production of automobiles, household appliances and electrical machinery to the region during the last two to three years.