Paraxylene strength could stymie Nippon Oil

A potential issue of concern with the proposed merger between Nippon Oil Corp. and Nippon Mining Holdings Inc. is the integrated entity’s overwhelming share of Japan’s overall paraxylene production capacity. With a combined 2.6 million tons per year (tpy) in capacity, the new company would be a giant in the paraxylene arena, representing 65% of the nation’s four million tpy of total paraxylene output capability. The two companies have already applied to the Japan Fair Trade Commission for prior consultation to determine if their merger proposal faces any anti-trust hurdle ahead of starting the legal process, and the necessary documents have been submitted to the commission. Some in the petrochemical industry are nervous about the resulting company’s large combined paraxylene capacity, which would rank it No.3 in the world, after U.S. company ExxonMobil Corp. and UK’s BP P.L.C. In addition, the new entity would be top in Asia in terms of paraxylene merchant sales, overtaking ExxonMobil. (January 22, 2009)