The world’s diaper supply could be in for one major mess after Japan’s Nippon Shokubai Company’s Himeji plant suffered explosions and fire damage on Saturday. Nippon Shokubai is a global leader in the production of acrylic acid, a key ingredient in baby diapers. Investors should start asking questions about any associated costs for diaper mega-producers Procter & Gamble (NYSE:PG) and Kimberly-Clark (NYSE:KMB).
Two chemical tank explosions rocked the plant Saturday afternoon and left the factory up in flames. One firefighter died in the accident and 33 others were injured.
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Plant operations will have to be stopped for a considerable time, leaving global acrylic acid and superabsorbent polymer SAP resin supplies lacking, and an uptick in prices sure to follow. Prior to the incident, Nippon Shokubai was responsible for 10 percent of the world’s acrylic acid production, and accounted for 20 percent of global SAP output. SAP is used in diapers due to the resin’s ability to absorb large amounts of liquid.