Mizuho bank research_1036_chemicals

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Mizuho bank research_1036_chemicals

  1. 1. Japan Industry Outlook / 36 2011 No.2 Table of Contents1, Comprehensive Industry 15, Broadcasting (Japanese only)2, Iron and Steel 16, Marine Shipping (Japanese only)3, Non-ferrous Metals 17, Logistics (Japanese only)4, Paper and Pulp 18, Electric Power5, Cement (Japanese only) 19, City Gas (Japanese only)6, Chemicals 20, Retail7, Pharmaceuticals 21, Food and Beverage8, Petroleum 22, Food Service Industry9, Automobiles 23, Construction (Japanese only)10, Shipbuilding (Japanese only) 24, Real Estate and Housing11, General Machinery 25, Travel and Tourism (Japanese only)12, Electronics 26, Nonbank (Card, Credit, and Lease) (Japanese13, IT Services only)14, Telecommunications 27, HR Service Industry (Japanese only) Contact: Industry Research Division Mizuho Corporate Bank, Ltd. mizuho.ird@mizuho-cb.co.jp
  2. 2. FY2011 Japan Industry Outlook (Chemicals) ¥ CHEMICALS Summary■ In FY2010, though supply and demand levels for petrochemical products were boosted by a recovery in domestic demand, output levels dropped due to (1) a decline in exports caused by the strong yen and (2) drops in operating capacity on the back of increased periodic maintenance. As a result, operating rates at ethylene plants remained roughly the same as FY2009. In FY2011, domestic demand is expected to move flatly. Though the import and export balance will be bolstered by firm Asian demand, the environment is expected to deteriorate due to the strong yen and an easing of supply and demand, so ethylene production is forecast to drop.■ In FY2010, the chemicals industry saw rising revenue and profits on the whole due to: a revival in domestic demand in the petrochemical sector and an expansion of margins on the back of bullish products markets in Asia; an increase in sales volumes in the electronics materials sector; and the buoyancy of other specialty sectors.■ In FY2011, the chemicals industry is expected overall to see rising revenue and profits on an actual-earnings basis due to: continually firm Asian demand in the petrochemical sector; demand related to post-earthquake reconstruction; and rising prices of domestic products on the back of bullish naphtha prices. However, profits rates are expected to drop due to deteriorating margins following the expansion of supply capacity in Asia.■ Topics will look at business strategy in the wake of the Great East Japan Earthquake. Short-term risk factors include rising import pressure and China’s moves towards self-sufficiency. Mid- to long-term risks include the increasing shift of production overseas by customer industries, as well as the possibility that the traditional business model for high-functionality chemical products may have reached its limits. The Japanese chemicals industry is hoped to become even more competitive internationally as a result of its efforts to deal with the changes to the business environment. 1 Mizuho Corporate Bank, Industry Research Division
  3. 3. FY2011 Japan Industry Outlook (Chemicals) I. INDUSTRY TRENDS [Fig. 6-1] Fluctuations in Domestic Demand, Imports, Exports and Output of Ethylene Equivalents【Actual】 Brief FY09 FY10 FY11 FY10/1H FY10/2H FY11/1H FY11/2H (Unit) (Actual) (Actual) (Forecast) (Actual) (Actual) (Estimate) (Forecast) Domestic (Thousand demand tons) 4,778 5,167 5,220 2,523 2,643 2,511 2,709 (Thousand Exports 2,849 2,377 2,285 1,091 1,285 1,035 1,250 tons) (Thousand Imports 408 542 670 287 255 380 290 tons) (Thousand Output 7,219 7,001 6,835 3,327 3,674 3,166 3,669 tons)【Rate of Increase and Decrease】 (YOY) (YOY) Brief FY09 FY10 FY11 FY10/1H FY10/2H FY11/1H FY11/2H (Unit) (Actual) (Actual) (Forecast) (Actual) (Actual) (Estimate) (Forecast) Domestic (%) - 2.6% + 8.1% + 1.0% + 13.7% + 3.3% - 0.5% + 2.5% demand Exports (%) + 36.1% - 16.6% - 3.9% - 26.6% - 5.6% - 5.2% - 2.8% Imports (%) - 15.0% + 32.9% + 23.5% + 50.2% + 17.7% + 32.1% + 13.7% Output (%) + 10.7% - 3.0% - 2.4% - 5.3% - 0.8% - 4.8% - 0.1% Source: Compiled by MHCB Industry Research Division based on Japan Petrochemical Industry Association materials. Note: The figures for FY2011 are based on MHCB Industry Research Division forecasts.1. Domestic Demand Domestic demand for Domestic demand for ethylene equivalent has been showing recovery from the ethylene equivalent financial crisis since hitting bottom in January–March 2009. Though this trend has entered the continued in FY2010, demand remained at around 90% of pre-crisis levels (5.7 post-recovery phase. million tons), rising 8.1% year-on-year to hit 5.17 million tons (see Fig. 6-1). Falls in domestic demand have been seen in some sectors due to: the ending of subsidies and the eco-points system; the suspension of production in assembly and processing industries following the earthquake; and declines in the operating capacity of processing companies due to electricity supply problems. However, some sectors have seen a revival in demand in relation to post-earthquake reconstruction, such as building materials and lifestyle goods. As a result, demand for ethylene equivalent is expected to remain flat in FY2011 at 5.22 million tons (up 1.0% year-on-year). The pace of the Domestic demand for synthetic resins had been recovering since the beginning recovery in demand of 2009, but there has been a general sense of stagnation since April–June 2010, for synthetic resins with gaps appearing between the business performances of different resins (see differs between resins. Fig. 6-2). 2 Mizuho Corporate Bank, Industry Research Division
  4. 4. FY2011 Japan Industry Outlook (Chemicals) Demand for LDPE (low-density polyethylene) and HDPE (high-density polyethylene) is mainly focused on lifestyle goods, so the industry’s post-crisis slump was relatively limited. As a result, the recovery in these sectors has also been quite limited. PP (polypropylene) demand is centered on industrial products, so this sector’s post-crisis slump was quite substantial, but the recovery has also been quite strong too. PP demand was hit hard by suspensions of production in the automobile sector, so an output recovery is expected from summer onwards. Though the PVC (polyvinyl chloride resin) industry has been impacted by falling investment in the housing and public-works sectors, demand is now gradually recovering after hitting the bottom due to improvements in the building-materials sector thanks to the housing eco-point system. The recovery in PS (polystyrene) demand is now peaking out due to: the continuing shift to thin-walled, lightweight products; the use of PET (polyethylene terephthalate) and other alternative materials in the packaging and general-goods sectors; and the impact of the use of alternative materials and the shift to overseas production in the household electrics sector. Market participants After bottoming out at 27,000 yen/kl in January–March 2009, domestic naphtha should keep an eye prices have started rising again and now stand at 55,000 yen/kl. However, on price rises in the wake of bullish naphtha prices are not keeping pace with crude oil prices, mainly due to (1) the crude oil prices. strong yen and (2) a temporary easing of supply and demand conditions in the wake of trouble at some Asian plants (see Fig. 6-3). Domestic commodity resin price rises are now expected to target the level of 60,000 yen/kl of domestic naphtha prices, but the markets may see an increase in the pace of cheap imports following the earthquake, so there is no guarantee that these price rises will seep through into the commodity resins. [Fig. 6-2] Domestic Shipments of Commodity Resins [Fig. 6-3] Price Movements of Domestic Naphtha and (12-month moving average) Dubai Crude Oil 115 90,000 140 国産ナフサ(左軸) Domestic naphtha (left axis) 110 80,000 ドバイ原油(右軸) (right axis) Dubai crude oil 120 105 70,000 100 100 60,000(2003/1=100) 95 (JPY/kl) 50,000 80 (円/kl) ($/bbl) 90 85 40,000 60 80 30,000 40 75 20,000 70 20 10,000 65 02/1 02/4 02/7 02/10 03/1 03/4 03/7 03/10 04/1 04/4 04/7 04/10 05/1 05/4 05/7 05/10 06/1 06/4 06/7 06/10 07/1 07/4 07/7 07/10 08/1 08/4 08/7 08/10 09/1 09/4 09/7 09/10 10/1 10/4 10/7 10/10 11/1 11/4 - 0 01/1 01/4 01/7 01/10 02/1 02/4 02/7 02/10 03/1 03/4 03/7 03/10 04/1 04/4 04/7 04/10 05/1 05/4 05/7 05/10 06/1 06/4 06/7 06/10 07/1 07/4 07/7 07/10 08/1 08/4 08/7 08/10 09/1 09/4 09/7 09/10 10/1 10/4 10/7 10/10 11/1 11/4 LDPE HDPE PP PS PVCSource: Compiled by MHCB Industry Research Division Source: Compiled by MHCB Industry Research Divisionbased on Japan Petrochemical Industry Association materials. based on Trade Statistics and materials provided by the Ministry of Economy, Trade and Industry. 3 Mizuho Corporate Bank, Industry Research Division
  5. 5. FY2011 Japan Industry Outlook (Chemicals)2. Imports and Exports Exports fell and In FY2010, exports of major petrochemical products fell 16.6% year-on-year to imports 2.38 million tons following: a recovery in domestic demand; a decline in actual increased in operating capacity due to an increase in periodic maintenance at domestic FY2010. ethylene plants; and a bullish yen pushing the dollar/yen pair below 85 yen. Results were down on the highs seen in FY2009, a time when the markets were seeing (1) rising appetite for exports on the back of weak domestic demand and (2) an expansion of Chinese demand. Historically speaking though, exports continued to move at high levels. Imports increased due to (1) the expansion of domestic demand and (2) the increasing gap between domestic and overseas prices following the rising domestic prices of some products (see Fig. 6-1). Chinese demand Chinese imports of commodity resins such as LDPE, HDPE and PP had been remains growing since 2009 at an unprecedented pace in recent years due to: the impact buoyant. of the Chinese government’s policies to stimulate domestic demand; large-scale public investment; and a recovery in exports to the developed nations of the US and Europe. However, this trend has peaked out and imports of the five largest resins have all started sliding (see Fig. 6-4). The main reasons for this though are (1) the building of new production facilities or the upgrading of capacity of existing facilities within China and (2) an increase of inflows from Middle-Eastern plants. Demand in China is expected to remain firm despite the impact of electricity shortages and monetary tightening. While supported by firm Asian demand, exports are expected to fall slightly in In FY2011, exports are forecast to fall FY2011 to 2.29 million tons (down 3.9% year-on-year) due to: the slightly while aforementioned increase in supply capacity; the strong yen; and the turn-around import pressure in domestic demand following the temporary suspension of some plants grows. following the earthquake. However, imports are forecast to remain on an upwards trend due to: the emergency import measures introduced temporarily for some products in order to deal with a supply crisis following the earthquake; the strong yen; and domestic inflows of Asian products on the back of a relaxation of supply and demand conditions. Asian markets In FY2010, Asian markets fell for a time on the back of a deterioration of the continued rising supply and demand balance but then began rising again from the latter half of overall in the year due to: anticipation for a rise in naphtha prices; and a sense of growing FY2010. tightness in supply and demand conditions due to drops in operating capacity following periodic maintenance and trouble at some large-scale plants (see Fig. 6-5). 4 Mizuho Corporate Bank, Industry Research Division
  6. 6. FY2011 Japan Industry Outlook (Chemicals) The outlook for The markets will probably turn bearish in the mid-term due to: concerns of a Asian markets is relaxation of the ethylene supply and demand balance in the wake of the rising bearish in the competitiveness of the US natural gas sector and the US government’s policy of mid-term. promoting exports; and the impact of the increase in new facilities throughout Asia and the Middle East. Asian markets have been falling despite (1) anticipation for a rise in naphtha prices and (2) the plant trouble in Japan and Taiwan. This suggests that the supply and demand balance may be deteriorating. [Fig. 6-4] Chinese Resin Imports [Fig. 6-5] Asian Commodity Resin Prices (12-month moving average) 2,400 180 2,200 160 2,000 1,800 140 1,600 (USD/t)(2003/1=100) 120 1,400 1,200 100 1,000 80 800 60 600 400 40 03/1 03/7 04/1 04/7 05/1 05/7 06/1 06/7 07/1 07/7 08/1 08/7 09/1 09/7 10/1 10/7 11/1 02/1 02/4 02/7 02/10 03/1 03/4 03/7 03/10 04/1 04/4 04/7 04/10 05/1 05/4 05/7 05/10 06/1 06/4 06/7 06/10 07/1 07/4 07/7 07/10 08/1 08/4 08/7 08/10 09/1 09/4 09/7 09/10 10/1 10/4 10/7 10/10 11/1 11/4 LDPE HDPE PP PS PVC ABS LDPE HDPE PP PS PVC ABS Source: Compiled by MHCB Industry Research DivisionSource: Compiled by MHCB Industry Research Division based on materials provided by the Heavy and Chemicalbased on China Customs Statistics, etc. Industries News Agency, etc. 3. Ethylene Production Production fell Despite a recovery in domestic demand, ethylene production fell slightly to 7 slightly in FY2010. million tons (down 3.0% year-on-year) in FY2010 due to an increase in imports and falling exports (see Fig. 6-6). Output is expected Despite less periodic maintenance at ethylene plants, production capacity is to drop in FY2011. expected to only increase slightly in FY2011 due to the current suspension/slowdown in operations at some ethylene plants. Domestic demand is expected to move flatly whilst exports are forecast to drop slightly. Though imports are set to increase, they account for only a small proportion of domestic consumption. As a result, operating rates at ethylene plants are expected to be around 90%. 5 Mizuho Corporate Bank, Industry Research Division
  7. 7. FY2011 Japan Industry Outlook (Chemicals) [Fig. 6-6] Ethylene Supply and Demand Balance 98.3% 96.6% 98.2% 97.8% 98.7% 98.8% 99.7% 98.2% 10,000 94.7% 94.1% 90.0% 9,000 Facility operation rate 86.6% Production capacity (actual capacity) 8,000 7697.1 7582.9 7657.4 7642.7 7691.6 7696.8 7530.8 7623.9 7597 7460.5 7416.7 7436.652 7,000 Domestic demand 5862.7 5799.3 5800.2 5681.458 5754.903 (Thousand tons/year) 6,000 5460.1 5547 5579.5 5166.597 5220 4906.5 4778.3 5,000 Export ratio 4,000 33.4% 30.5% 30.8% 30.5% 32.1% 29.8% 29.2% 28.6% 29.8% 27.8% 3,000 39.5% 33.9% Import ratio 2,000 9.8% 6.1% 6.5% 7.4% 7.7% 1,000 5.3% 5.6% 5.3% 5.7% 5.4% 5.5% 5.7% - 2011fy forecast 2000fy 2001fy 2002fy 2003fy 2004fy 2005fy 2006fy 2007fy 2008fy 2009fy 2010fy 2011fy予想 Source: Compiled by MHCB Industry Research Division based on Japan Petrochemical Industry Association materials.II: CORPORATE EARNINGS [Fig. 6-7] Business Results of the Big Seven Chemical Companies【Actual】 【Rate of Increase and Decrease】 (YOY) No. of companies FY09 FY10 FY11 Brief FY09 FY10 FY11 (Unit) (Actual) (Actual) (Estimate) (Unit) (Actual) (Actual) (Estimate) 7 7 Sales Sales (JPY billions) 8633.7 10237.0 11858.7 (%) - 15.0% + 18.6% + 15.8% Operating 7 Operating 7 profit/loss (JPY billions) 201.4 594.5 615.3 profit/loss (%) + 438.6% + 195.2% + 3.5% Ordinary 7 Ordinary 7 Became profit/loss (JPY billions) 144.0 564.5 606.4 profit/loss (%) profitable + 292.0% + 7.4% Net profit/loss 7 Net profit/loss 7 Became for the period (JPY billions) 1.9 233.1 298.2 for the period (%) profitable + 12,261.8% + 27.9%Source: Compiled by MHCB Industry Research Division based on corporate financial statements.Note: The seven companies are Asahi Kasei, Showa Denko, Sumitomo Chemical, Tosoh, Mitsui Chemical,Mitsubishi Chemical HD, and Ube Industries (listed in order of Securities Identification Code). [Fig. 6-8] Business Results of the Seven Specialty Chemical Companies 【Actual】 【Rate of Increase and Decrease】 (YOY) No. of companies FY09 FY10 FY11 Brief FY09 FY10 FY11 (Unit) (Actual) (Actual) (Estimate) (Unit) (Actual) (Actual) (Estimate) 7 7 Sales Sales (JPY billions) 2674.6 2960.0 3261.9 (%) - 13.1% + 10.7% + 10.2% Operating 7 Operating 7 profit/loss (JPY billions) 258.8 354.1 391.2 profit/loss (%) - 16.9% + 36.8% + 10.5% Ordinary 7 Ordinary 7 profit/loss (JPY billions) 273.5 371.6 410.0 profit/loss (%) - 16.8% + 35.9% + 10.3% Net profit/loss 7 Net profit/loss 7 for the period (JPY billions) 174.9 224.1 258.6 for the period (%) + 3.4% + 28.2% + 15.4% 6 Mizuho Corporate Bank, Industry Research Division
  8. 8. FY2011 Japan Industry Outlook (Chemicals)Source: Compiled by MHCB Industry Research Division based on corporate financial statements.Note: The seven companies are Nissan Chemical, Shin-Etsu Chemical, JSR, Tokyo Ohka, Sumitomo Bakelite,Hitachi Chemical, and Nitto Denko (listed in order of Securities Identification Code).1. FY2010 Final The seven majors In FY2010, Japanese big seven chemical companies saw a double-digit increase saw rising revenue in revenue (up 18.6% year-on-year) on the back of: bullish conditions in the and profits. petrochemical products market; increased volumes due to recovering demand; and buoyant conditions in the electronic materials sector and other fine/specialty sectors. The markets saw break-even points falling on the back of the slashing of fixed costs, a trend that began in FY2009, while margins also grew in the petrochemical sector. As a result, all companies saw rising profits, with each profit heading also showing gains or shifting back into the black. Operating profits recovered to 90% of the recent peaks seen in FY2006 (663.6 billion yen) (see Fig. 6-7). The seven specialty Japanese big seven companies involved in the specialty chemicals sector saw companies also saw rising revenue and profits on the whole in FY2010, despite some companies rising revenue and booking extraordinary losses due to the Great East Japan Earthquake. The operating profits. reasons for these buoyant results were: increases in volumes due to the revival of demand in their main products: electronic materials; and the generally-bullish movements of other fine/specialty sectors (see Fig. 6-8).2. FY2011 Forecast The seven majors will In FY2011, the big seven chemical companies are expected to see rising generally see rising revenue due to bullish prices on the back of anticipation for a rise in naphtha revenue and profits prices. This anticipation is being driven by (1) the emergence of in both the petrochemical and reconstruction-related demand and (2) firm Asian demand compensating for the non-petrochemical slump in volumes. However, while managing to maintain rising revenue and sectors. profits on an actual-earnings basis, the companies are forecast to see falling rates of profit due to: an easing of the Asian supply and demand balance as well as drops in margins on the back of fully-fledged operational activity at new plants; and falling operational rates following the earthquake. The non-petrochemical sector will probably be supported by rising earnings at all companies involved in electrical materials operations and other fine/specialty sectors, while there are also high-expectations related to new products such as lithium-ion secondary battery components for the car products sector,. The seven specialty Each specialty chemicals company is expected to post different results companies will see depending on their business sector and the degree to which they were impacted differences in earnings due to the by the earthquake. The electrical materials sector is expected to see rising impact of the revenue and profits due to: improvements of final products due to technological earthquake and so innovation; and the commercial launch of new products such as smartphones. on. 7 Mizuho Corporate Bank, Industry Research Division
  9. 9. FY2011 Japan Industry Outlook (Chemicals) However, the pace at which earnings improve is forecast to slow down compared to last year due to: falling prices in the liquid crystal panel sector from the latter half of last year onwards; and a wearing-off of the impact of the lowering of break-even points in FY2010. The risk factors that could affect business results in FY2011 are as follows. Risks for the The petrochemical sector faces the risk of: Chinese imports of petrochemical petrochemical sector products falling significantly as the country moves towards self-sufficiency at a include rising faster-than-expected pace; a continuing increase in imports as domestic imports and further moves towards processing companies and so on get used to using petrochemical products self-sufficiency by imported during the emergency period after the earthquake and continue to use China. these products even after domestic plants recover. Furthermore, attention should continue to be paid to the revival of the price competitiveness of US companies (which rely mainly on natural gas) as well as the US government’s export drive. Risks for the Risk factors for the non-petrochemical sector include: (1) downwards pressure non-petrochemical on the price of materials following the commoditization of final applications sector include and stagnation in the area of functions competition; and (2) the non-adoption of falling prices and further the business model of improving product mixes through the introduction of commoditization. new products. These trends are exemplified by the way the liquid crystal TV sector (a sector that had seen continual growth) is now showing signs of stalling growth on a monetary basis against a backdrop of falling sales prices.III. TOPICS: Business Strategies after the Great East Japan Earthquake The direct impact The immediate impact of the Great East Japan Earthquake on the chemicals of the earthquake industry was somewhat limited. If we take at look at the state of those ethylene was relatively plants that suspended operations directly after the disaster, we can see that the limited. reconstruction efforts were already more-or-less finished by the end of June at Mitsubishi Chemical’s two plants in Kashima (operating capacity in years without periodic maintenance: 901,000 tons), Maruzen Petrochemical’s Chiba plant (525,000 tons) and JX Nippon Oil & Energy’s Kawasaki plant (460,000 tons). The shift of supply However, the earthquake will probably end up having a significant impact on chains overseas the chemicals industry. This is because customer industries such as the may accelerate. automobile and electronics sectors may now step up efforts to shift production overseas in the mid- to long-term as a result of the earthquake. The reasons for this are: the drops in electricity supply; a re-awareness of the importance of supply chains; the suspension of talks about reforming Japanese corporate tax levels; the postponement of discussions about TPP or FTAs; and the continuing bullishness of the yen. 8 Mizuho Corporate Bank, Industry Research Division
  10. 10. FY2011 Japan Industry Outlook (Chemicals) Furthermore, in the wake of the earthquake, companies such as processors andThe increase of converters were seen to increase imports from Asia (such as South Korea,imports from Asia Taiwan and China) in order to deal with the temporary supply crisis. This hasmay be anirreversible trend. given these companies the chance to adapt to these imported products and to review excessive specifications. There is also a possibility that cheap South Korean and Taiwanese products will flood into the Japanese market after losing their Chinese market due to China’s increasing self-sufficiency. As a result of the above, there are definite concerns that the trend of increasing imports may be here to stay.Companies may Japanese companies have traditionally excelled in the functional chemicalsneed to revise their products sector, and many Japanese products have managed to attain dominantstrategies of aiming positions due to the attentive and smooth response to diverse customer needs asfor dominance in the well as advanced manufacturing technologies as well as research andhigh-functionalityproduct sector. development. However, the earthquake provided customer industries with reconfirmation of the danger of concentrated supply chains, so these industries are growing more aware of the need to diversify procurement sources. As a result, the functional chemicals sector will also have to adapt a new mid-term business strategy.Companies are expected The domestic chemicals industry is under pressure from the conflicting needs toto adopt new measures (1) respond to overcapacity and (2) maintain a stable supply by decentralizingto boost competitiveness production centers. From hereon, companies may be pushed into M&As oras they deal withchanges to the business reorganizations that transcend corporate group structures. Furthermore, theenvironment. aforementioned functional chemicals products sector may also see more robust business models than before due to the restructuring of business strategies. Japan’s chemicals industry is hoped to grow to be even more competitive internationally as a result of its efforts to deal with the changes to the business environment that will occur in future. 9 Mizuho Corporate Bank, Industry Research Division
  11. 11. FY2011 Japan Industry Outlook (Chemicals)[Fig. 6-9] Mid-term Impact of the Earthquake Pre-earthquake issues and problems (= unchanged factors) ○ Intensification of domestic cost competitiveness ○ Emerging-economy demand ○ Restructuring and weeding-out in the commodity chemicals sector ○ Reinforcement and expansion in the functional chemicals sector ○ Capturing of decentralized, expanding and transitioning customers and markets ○ The widening gap between the competitive conditions of Japan and the emerging economies due to TPP and FTAs Post-earthquake issues and problems (= changed factors) ○ Responsibility for explaining catastrophe risk management ○ Production center strategy in the wake of the conflicting needs for centralization and decentralization ○ New requests and changes to the procurement stances of overseas customers ○ The shelving of unrealistic targets for cutting CO2 and the real emitters of CO2 ○ Real electricity costs, electricity quality and bottle necks ○ Slow restoration/reconstruction and the acceleration of the hollowing-out of domestic industry Points clarified by the earthquake ・ The importance of supply chains and value chains ・ The low level of substitutability in the Japanese materials industry ・ The mismatch between added value and corporate earnings ・ The defects of the accelerating industry specialization within Asia due to FTA/TPP ・ The weakness of customer procurement management Points that should be tackled in the wake of the earthquake Changes to catastrophe risk management and production center strategy will need to involve restructuring and M&As beyond the group level Dominance, high shares or niches in markets will involve new cost burdens The procurement strategies of customers will change significantlySource: Compiled by MHCB Industry Research Division. Akiko Matsumoto akiko.matsumoto@mizuho-cb.co.jp Primary Materials Team Industry Research Division Mizuho Corporate Bank, Ltd. 10 Mizuho Corporate Bank, Industry Research Division
  12. 12. FY2011 Japan Industry Outlook (Chemicals)© 2011 Mizuho Corporate Bank, Ltd.This document has been prepared solely for the purpose of providing financial solution information.This document is not a recommendation or solicitation for sales. Nor does it constitute an agreement toenter into transactions with any Mizuho Financial Group company.This document has been prepared based on information believed to be reliable and accurate. TheBank accepts no responsibility for the accuracy or appropriateness of such information. Upon usingthis document, if considered appropriate, or if necessary, please consult with lawyers, CPAs and taxaccountants.© Mizuho Corporate Bank, Ltd. All Rights Reserved. This document may not be altered, reproducedor redistributed, or passed on to any other party, in whole or in part, without the prior written consent ofMizuho Corporate Bank, Ltd. 11 Mizuho Corporate Bank, Industry Research Division

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