J A P A N ' S chemical industry is not an un­beatable competitor in everything pro­duced. It can produce and sell some products below world prices. But in others, Japanese costs are above world levels.

With the large-tonnage fertilizer, am­monium sulfate, for instance, Japanese producers are breaking even or losing money. Vinyl chloride is being ex­ported in increasing quantity at drasti­cally cut price levels.

Anc in polyethylene, which is just starting production in Japan, the costs

will be high. It is doubtful, say W. R. O a c e ' s William Copulsky and Fred Shinagel, if Japan's polyethylene can be shipped into world markets competi­tively within the next five years.

• Export Torge** Japan's export tar­get for nitrogen fertilizers in 1958-59 has been set at 1.9 million metric tons of ammonium sulfate, or 400,000 tons of nitrogen. With domestic demand expected to increase only slightly, this export objective is about double that of ! 9 " - > 8 .

In the past, 90'f of these exports

More Chemicals Hit World Market (Japanese Consomption and Exports)

Contained Nitrogen

Year

1954 1955 1956 1957 1958

Source: i

Urea

Year

1QK/1

1955 1956 1957

Source: T r a d e a n d sr

thousands of metr ic

Consumption

515 560 630 640 650

\ ikma.n. Ltd.

tons

Exports

100 110 140 160 200

thousands o f metric tons

Consumption

125 172 203 253

Japanese Min is t ry • dvsi ry.

o f

Exports

Q 0

60 112

Internat ional

Ammonium Sulfate

th

Year

1954 1955 1956 1957

Source: J* T r a d e a n d Ind

Polyvinyl

ousands of metr ic tons

Consumption

1600 1700 1800 1800

a panese Ministry ustry.

Chloride

thousands of metric

Year

1954 1955 1956 1957 1958*

* estimated Source : i

Trade a n d In Artirissfry o f Firs

of

tons

Consumption

0 35 66

104 68

G panese iT-»ini5*ry Οι dustry; Customs Divisio onee.

Exports

500 400 500 700

Internat ional

Exports

0 c 1 5

17

«nternaîionQi η, Japanese

have been going to Taiwan, Korea, and Red China. The Chinese market would appear to be impossible now, and part of the contract between Red China and japan has been canceled for political reasons. Further, all of these areas are increasing their local output.

Japan's maximum domestic sulfate price last July was set at $35 per metric ton, a decrease of 5r< from the previous year. Many producers with obsolete equipment cannot make a profit at this price.

• Urea Outle ts Sought . Until re­cently, Shinagel told the ACS New York Section's chemical marketing and economics group, 25 ' i of Japanese urea was exported, mostly to Korea. Korean urea plants are due to go on stream soon and the Japanese are currently seeking world markets. Recent Japanese bids on large Far Eastern urea business re­flect low costs. In Japan, price is $77 to $95 per metric ton, f.o.b. Exported Japanese urea goes for $96 to $103 in Europe and $125 in the U, S.

Present Japanese urea capacity is over 600,000 tons a year, second only to that of the U. S., which is 800,000 tons. Capacity for the rest of the world is about 500,000 tons.

Polyethylene consumption has grown rapidly in Japan—from 300,000 pounds in 1951 to about 37 million pounds in 1957, and an estimated 66 million pounds in 1958. Despite initiation of domestic production, Japan will have to import one half of its polyethylene needs in the near future.

It appears unlikely that in the next five years Japanese polyethylene will threaten U. S. producers, Shinagel says. But the U. S. will eventually lose the large Japanese export market which totals more than 5% of U. S. output, he adds.

• Vinyl Competi t ion. Japan's vinyl chloride production is based on acety­lene generated from calcium carbide. The country has been able to expand PVC output from 22,000 metric tons in 1954 to 109,000 tons in 1957. And production of 170,000 tons is planned

5 2 C & E N A P R I L 6, 1 9 5 9

INTERNATIONAL

Japanese Exports Aren t Unbeatable

Polyethylene: Newcomer to Nippon

Company

Mitsu i S u m i t o m o Mi t sub i sh i Showa F u r u k a w a S u m i t o m o

Scheduled Production

Date

On stream On stream Dec. 1958 Spring 1959 Spring 1959 Spring 1960

Process

Ziegler ( low p r e s s u r e )

I m p e r i a l C h e m i c a l I n d u s t r i e s

I m p e r i a l C h e m i c a l I n d u s t r i e »

P h i l l i p s ( low p r e s s u r e )

M e d i u m p r e s s u r e

I m p e r i a l C h e m i c a l I n d u s t r i e s

T o t a l

Capacity, Mil­lions of Pounds

2 5

2 5

2 5

2 5

A°L 1 5 5

NOTE: Japanese consumption of polyethylene is estimated at 56 million pounds in Î95S.

Source: Plastics Industry News (Japan).

for 1960, notwithstanding inventory in ­creases which have p lagued industry in the past.

P V C prices hroke from 2 4 t o 2 5 cents per pound in 1 9 5 5 - 5 6 to 16 V - to 2 2 cents in the last quarter of 1 9 5 7 . Ca­pacity expansion was the major factor. D e m a n d also began s lowing u p i n 1957 as the result of t ight money. Exports of vinyl resins and products w e r e about 2 0 0 0 metric tons in 1955, a n d 1000 tons in Î95Ô. T h e y jumped t o 54O0 tons in 1957» and to an e s t i m a t e d 16,-5 0 0 tons in 1958.

Shinagel says import dut i e s o n vinyl plastics d o not stop Japanese imports . T h e U. K. duty is lOVr, and the U. S. duty is 35',*. The U . S., w i th 1 billion pounds capacity and sales of 6 5 0 mil­lion pounds , is m a poor posi t ion to re­sist low-priced imports, Shinage l points out. •

COMMENT

Are we moving toward a normal and satisfactory pattern of interna­tional trade? . . . In one sense [the American record] is satisfac­tory beyond all expectations. Thanks to your economic growth, total imports into the U. S. have . . . practically doubled over the last 10 years. We in the U. K. . . . have worked hard to take ad­vantage of the wide opportunities in your markets. And these efforts have been successful in many direc­tions. But we must ask ourselves whether the remarkable things to which 1 have referred go far enough in the critical circumstances of today. . . .

I do not believe that we ham yet thought through what it is neces­sary to do. But I am clear about one thing. The demands of our age cannot be wholly met by a pol­icy of gifts and charity. You do not hold nations together on that basis. Especially when men think a hoi war is unlikely, aid is not a substitute for trade. A man toill take your money, of course he will, but it will not make him like you or bind him to you in anything ap­proaching the same ivay as if you do business with him, and allow him to earn the dollars ami the

pounds he needs to pay for his es­sential imports. This means more liberal trading policies than we practice today. . . .

First take the quotas on lead and zinc. The announcement of these quotas designed to protect high cost production in the U. S. created the greatest concern during the Montreal Economie Conference. Australia and Canada in particular felt that this restrictive action was contrary to the general economic policy which a creditor country and a very friendly country should pur­sue. The same is true of restric­tions on the import of oil. . . .

. . there is the wool tariff quota, in imposing which the U. S. authorities are certainly acting within their treaty rights. . . . Ζ am sorry that the V. S. Government should have felt compelled to do this and to do it in the way they have. We have repeatedly pro­tested against this measure, point­ing out that it must hit unfairly high quality cloths, in which fash­ion counts a good deal, and must favor staple cloths which can be stocked against the period when the lower duty quota is open. We are not asking for special favors, but you cannot expect us to be satisfied when the arrangements continue to favor Japan at the expense of the U.K. . . .

ïéti€,

step dismantled the quotas on dol­lar goods which we had to put on to protect our precarious exchange position. I said at Montreal last September that we hoped to go fur­ther in the removal of these quotas this year. We should like to ilo this, but we must be sure we can earn enough dollars to pay for any increase in our imports which would follow.

i tvant you to knotv thai our con­cern at the increased number of ex­amples of protectionism in America is not only due to the loss of dollar earnings by this country. We have to think of the economic well-being of the Free World as a whole. . . .

We appreciate that the U. S. ad­ministration has its own very real problems and difficulties. . . But you and we have always re­alized that interdependence tcould involve efforts and sacrifices. If the Free World is not prepared to make these, the outlook is indeed black—or perhaps I should say red. We cannot expect the U* S. to carry the whole burden, but it is only by accepting a major share of the har­den, particularly in respect of trade, thai the XJ. S. can maintain its claim to a leadership which others will be glad to foliota.

SIR D A V I D E C C L E S , President , U. K. Board of Trade, before American Chamber of C o m m e r c e

A P R I L 6, 1 9 5 9 C & E N 5 3