Mitsui Chemicals, Idemitsu Kosan, and Sumitomo Chemical combine their polyolefin production capacities to exceed 2.3 million tons!

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On December 24, Mitsui Chemicals, Idemitsu Kosan, and Sumitomo Chemical announced that they had reached a final agreement to jointly establish a strong polyolefin manufacturing company. Previously, on September 10, these three Japanese chemical giants jointly announced that they had signed a memorandum of understanding to integrate the polyolefin business operated by Prime Polymer Co., Ltd. (abbreviated as “PRM”), which is jointly invested in by Mitsui Chemicals and Idemitsu Kosan, with Sumitomo Chemical’s polypropylene and linear low-density polyethylene (LLDPE) businesses in Japan. Polyolefins account for about 50% of Japan’s plastic demand and are crucial to Japanese industry. Since the 1990s, despite mergers among Japanese polyolefin manufacturers, the problem of overcapacity has yet to be resolved. The three companies said that demand for polyolefins is expected to decline further in the future, due to a shrinking market demand resulting from Japan’s declining population and changing lifestyles. Under the agreement, Sumitomo Chemical transferred its PP and LLDPE businesses in Japan to PRM in two phases. In the first phase, in addition to the production function, Sumitomo Chemical will acquire a 20% stake in PRM, with completion planned for July 1, 2026. At that time, Mitsui & Co. will hold 52% of the shares in PRM, Idemitsu Kosan will hold 28%, and Sumitomo Chemical will hold 20% ； The second phase will involve the transfer of assets and liabilities related to production, with completion scheduled for April 1, 2027. PRM is a joint venture established in 2005 by Mitsui Chemicals and Idemitsu Kosan, with an annual production capacity of 1.26 million tons of polypropylene and 550,000 tons of polyethylene; it is a major producer of polyolefin products in Japan. Upon completion, the total production capacity of PRM’s polyolefins will reach 2.31 million tons per year, of which 1.59 million tons will be for polypropylene and 720,000 tons for polyethylene. The combined net sales amount will be 387.3 billion yen (based on figures for 2024), with cost savings of over 8 billion yen expected each year. According to data from Japan’s Ministry of Economy, Trade and Industry, as of the end of December 2024, Japan’s total production capacity for polyolefins was 5.83 million tons. Once Sumitomo Chemical’s polypropylene and LLDPE businesses are integrated into PRM, they will account for over 30% of the country’s plastic production capacity. In recent years, weak domestic demand in Japan has weighed on the petrochemical industry, prompting Japanese chemical companies to accelerate the consolidation of the traditional petrochemical sector. For example, Idemitsu Kosan and Sansei Kagaku jointly announced on December 19 that the two companies had reached a final agreement regarding the integration of Japan’s ethylene production operations, which includes shutting down an ethylene plant with an annual capacity of 370,000 tons.