Review of Operations: Petrochemical

Tosoh’s core business is the naphtha cracker located at its Yokkaichi Complex, which manufactures fundamental petrochemical feedstocks such as ethylene and propylene.

Business Vision

The naphtha cracker, which forms the foundation of Tosoh’s petrochemical business, are required to maintain stable and high operational capacity. It is vital not only in providing raw materials for Tosoh’s derivative product manufacturing but also in supplying materials to other companies in the industrial complex. As the owner of the only naphtha cracker in the Chukyo region, Tosoh places the highest priority on safe and stable operations, to maintain high operational capacity. To bring this to fruition, the company will efficiently use all fractions available to achieve high-added value and reduce CO₂ emissions, which will be in line with our objective toward achieving carbon neutrality in pursuit of the optimal combination of growth and decarbonization.

Medium-Term Business Policy (FY2023–FY2025)

• Maintaining stable production from naphtha cracking furnace and high utilization rate through expansion of sales and self-consumption
• Launched investigation into chemical recycling of petrochemical products

Medium-Term Business Policy Initiatives

As an initiative during the current medium-term business plan period, Tosoh will continue leveraging the strength of its proprietary zeolite catalyst technology in aromatizing C4 fractions while also looking to potentially expand into chemical recycling. The objective is to reinforce the foundation of our olefin business. Additionally, within the framework of our industrial complex, the company will take measures to address the issue of increased hydrogen demand by encouraging the expansion of production capacity at our current facilities and investing in the construction of any new required facilities.

Regarding decarbonization, we will improve energy efficiency at one facility by installing one additional gas turbine to reduce CO₂ emissions. Tosoh will begin preparing to introduce bio naphtha of non-petroleum origin. Moreover, the company will further deepen cooperative relationships with other industrial complex companies on future themes, including collaboration based on Tosoh's CO₂ separation and recovery technology and the utilization of surplus methane resulting from CO₂ reduction. We will also discuss the possibilities of appropriate cost-sharing and the pass-on expenses associated with decarbonization measures in mind.

Differentiation Strategies

Utilization of Digital Transformation (DX)

Tosoh has installed an advanced control system at its BTX production facility which has been in full operation since January 2023. It is well known that the composition of BTX raw materials can vary, and traditionally, skilled operators would watch for the best distribution while conducting operations. Therefore, making adjustments to raw materials manually inevitably causes fluctuations, which led to the company introducing an advanced control system. Differences in operational experience do not affect operations, making smooth, stable production possible at near-top capacity. The company is also considering constructing a simulator based on analyzing reaction rates at our cumene production facility. We are currently in the process of incorporating past movement data into our data system, and we hope to have the updated system operational within the next few years.

Naphtha cracking furnace

Efforts Toward Effective Utilization of Unused Fractions

Looking at process development for the aromatization of unused C4 fractions, in addition to spent C5 and C9, we have begun searching for an economically rational raw material mix that can be used as a blending material, by branching out into waste plastic oil, which can be obtained through polyethylene (PE)-based chemical recycling.

Tosoh operates a zeolite business and is highly capable in the area of catalyst technology. As such, the company’s objective is to capitalize on this strength and effectively use unused fractions as situations dictate. Although there are certain issues that the company must overcome in terms of practical application, we aim to achieve this goal and resolve any issues as quickly as possible.

S Response to Carbon Neutrality

Tosoh has set the goal of reducing group wide GHG emissions by thirty percent compared with FY2019 levels by FY2031. Among the various measures under consideration, the company is considering installing one additional gas turbine at our Yokkaichi Complex to improve energy efficiency. The power plant at the Yokkaichi Complex currently uses oil coke as its primary fuel source for in-house power generation. Within the next few years, we plan to install a gas turbine that uses the plant's surplus gas as fuel, thereby mitigating the demand on existing facilities and lowering CO₂ emissions. We must also consider other future energy trends, including ammonia, hydrogen, and biomass when considering such aspects as stable procurement and infrastructure installation. To its merit, Tosoh is also a participant in the Yokkaichi Carbon Neutral Promotion Committee, formed in conjunction with Mie Prefecture, Yokkaichi City, and neighboring companies, to investigate ways to reduce CO₂ emissions.

Tosoh always aims to operate a unique, distinctive business. Therefore, we offer products that satisfy broad-ranging needs while carefully integrating polyethylene and functional polymers into a variety of different business domains.

Business Vision

In response to the challenging business environment that has resulted from the global trend toward decarbonization and de-plasticization, Tosoh has identified three priority themes: stable operations and supply, differentiation and higher-added-value, and environmental response.

The focus on differentiation and higher-added-value will further deepen functions and performance in applications that have traditionally been the company’s strengths. Under the theme of environmental response, we will continue developing and expanding sales of products that improve plastic recyclability, as well as products for the electric vehicle (EV) market.

While maintaining a strong awareness that plastics are essential materials for our daily lives, Tosoh will continue working hard to satisfy increasingly diverse user demands.

Medium-Term Business Policy (FY2023–FY2025)

Polyethylene

• Differentiate, and ensure higher-added-value
• Increase base sales price to expand earnings

Functional polymers

• Increase production capacity in growth areas
• Expand applications to grow market share

World’s top share—Synthetic rubber CSM

Susteel^® polyphenylene sulfide (PPS)

Medium-Term Business Policy Initiatives

Polyethylene Business Initiatives

Capitalizing on the product's superiority in terms of cleanliness, low odor, and low off-flavor properties, Tosoh plans to further boost its market share in the food packaging, medical, and semiconductor fields—areas in which the company has traditionally excelled—and will invest more in the construction of a stable supply system. The company will fully leverage its proprietary catalyst and compounding technologies to not only satisfy user requirements but also grow our product lineup. And in support of recycling plastic and the reducing of plastic waste, we will actively promote the development of products utilizing all of the technology and experience we have acquired. Tosoh will also continue collaborating with brand owners to deliver products that contribute and benefit society.

Toward Specialty Business Operating Income in Excess of ¥100 Billion

Tosoh intends to grow its supply structure through planned functional polymer capacity expansion and accelerate environmentally friendly product R&D in response to policies related to the electrification of vehicles to further expand earnings. And, in the interest of establishing a stable supply system and expanding our market share, the company will steadily implement capacity increase plans related to our mainstay synthetic rubbers, chloroprene rubber (CR), and chlorosulphonated polyethylene rubber (CSM) products. Tosoh will also develop and expand sales of environmentally friendly products such as CR augmented with carbon nanofibers.

Products Certified as Solutions to Social Issues

・Ethylene-vinyl acetate (EVA) copolymer for encapsulation of solar cells

For more details, please visit: Social Issue Solutions

Differentiation Strategies

Making Polyethylene More Environmentally Friendly
Recycling aids, mono-materialization, thin-film, integration with paper, and more

Tosoh developed Melthene as a functional resin that is modified both chemically and physically to add higher value to EVA and promotes it as a practical EVA offering exceptional adhesive properties.

Users have praised Melthene M for its excellent adhesive properties and easy peel* material that easily peels off from the base material. The company is also developing Melthene H, which is EVA saponified with caustic soda, for other resin modification applications by capitalizing on its specific molecular structure.

Amidst the active promotion of the material recycling of plastics, Melthene-S is being used as a plastic recycling aid in product development to enhance plastic composite material recyclability. Tosoh will, therefore, continue its emphasis on product development to further contribute to the resolution of a variety of social issues.

Environmentally Friendly Automobile-Related Products

Tosoh considered entering into the engineering plastics business—where it anticipated growth—and launched production of polyphenylene sulfide (PPS) in Japan for the first time in 1986. With noticeably superior characteristics such as heat resistance, rigidity, and dimensional stability, PPS is now widely used in various applications, including automotive parts as well as electrical and electronic components. The company believes the continuing trend toward the transition to EVs should boost demand for electrical components. Given this, Tosoh is developing numerous grades of its PPS for automotive applications by capitalizing on the product’s superior metal bonding properties.

S High-Quality Grade to Satisfy Broad-Ranging Needs

At Tosoh, we believe it is not only important, but indeed our responsibility as a manufacturer, to provide products that meet and satisfy user needs. Although the company does support the option of trimming its product lineup to boost production efficiency, pursuing the tailoring of products to meet such needs will boost customer satisfaction while also enhancing our development and technical capabilities, and we intend to adhere to this policy. And as user needs and demands become increasingly diverse, we will remain diligent in our efforts to develop products and further enhance our lineup.

O Growing Environmental Awareness and Corresponding Material Development

Looking at polyethylene, Tosoh is working hard to reduce the use of plastic in all food containers and other products by either employing thinner films or instead using paper when possible to reduce weight. To improve recyclability, we focus on plastic recycling aids and shifting from plastic composite to mono-materials.

In the area of functional polymers, the company is augmenting the development of metal-bonded PPS for electrical components for EVs. In response to the increasing weight of vehicles due to the transition to EVs, we are actively advancing the development and application of petroleum resin as a performance enhancer for fuel-efficient tires.