Three Japanese Chemical Companies will Consolidate Their Polyolefin Businesses
2025-12-30
On December 24, Mitsui Chemicals, Idemitsu Kosan and Sumitomo Chemical announced the final agreement to jointly establish a robust polyolefin producer.
Previously, the three Japanese chemical giants jointly announced on September 10 that they had signed a memorandum of understanding to integrate the polyolefin business operated by Prime Polymer Co., Ltd. (abbreviated as "PRM"), jointly invested by Mitsui Chemicals and Idemitsu, and consolidate it with Sumitomo Chemical¡äs polypropylene and linear low-density polyethylene (LLDPE) operations in Japan.
Polyolefins account for approximately 50% of Japan¡äs plastic demand and are crucial to its industrial sector. Despite mergers among Japanese polyolefin manufacturers since the 1990s, the issue of oversupply remains unresolved. Three companies stated that due to Japan¡äs declining population and changing lifestyles leading to shrinking market demand, future polyolefin demand is expected to further decrease.
Under the agreement, Sumitomo Chemical will transfer its PP and LLDPE business in Japan to PRM in two stages. In the first phase, excluding production functions, Sumitomo Chemical will acquire a 20% stake in PRM, with the transaction scheduled to be completed by July 1, 2026. At that time, Mitsui will hold a 52% stake in PRM, Idemitsu will own 28%, and Sumitomo Chemical will retain 20%. In the second phase, production-related assets and liabilities will be transferred, with the plan to finalize the process by 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, making it a leading producer of polyolefin products in Japan.
Upon completion, PRM¡äs total polyolefin production capacity will reach 2.31 million tons annually, with polypropylene capacity at 1.59 million tons/year and polyethylene capacity at 0.72 million tons/year. The consolidated net sales will amount to 387.3 billion yen (for fiscal year 2024), with projected annual cost savings exceeding 8 billion yen.
According to data from Ministry of Economy, Trade and Industry, as of the end of December 2024, Japan¡äs total polyolefin production capacity had reached 5.83 million tons. After Sumitomo Chemical¡äs polypropylene and LLDPE businesses were integrated into PRM, they will account for over 30% of the domestic plastic production capacity.
In recent years, weak domestic demand in Japan has dragged down the petrochemical industry, prompting Japanese chemical companies to accelerate the integration of traditional petrochemical sectors. For instance, Idemitsu Kosan and Mitsui Chemicals jointly announced on December 19 that they have reached a final agreement to consolidate their ethylene production operations in Chiba, Japan, which includes the shutdown of a 370,000-ton-per-year ethylene unit.
Previously, the three Japanese chemical giants jointly announced on September 10 that they had signed a memorandum of understanding to integrate the polyolefin business operated by Prime Polymer Co., Ltd. (abbreviated as "PRM"), jointly invested by Mitsui Chemicals and Idemitsu, and consolidate it with Sumitomo Chemical¡äs polypropylene and linear low-density polyethylene (LLDPE) operations in Japan.
Polyolefins account for approximately 50% of Japan¡äs plastic demand and are crucial to its industrial sector. Despite mergers among Japanese polyolefin manufacturers since the 1990s, the issue of oversupply remains unresolved. Three companies stated that due to Japan¡äs declining population and changing lifestyles leading to shrinking market demand, future polyolefin demand is expected to further decrease.
Under the agreement, Sumitomo Chemical will transfer its PP and LLDPE business in Japan to PRM in two stages. In the first phase, excluding production functions, Sumitomo Chemical will acquire a 20% stake in PRM, with the transaction scheduled to be completed by July 1, 2026. At that time, Mitsui will hold a 52% stake in PRM, Idemitsu will own 28%, and Sumitomo Chemical will retain 20%. In the second phase, production-related assets and liabilities will be transferred, with the plan to finalize the process by 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, making it a leading producer of polyolefin products in Japan.
Upon completion, PRM¡äs total polyolefin production capacity will reach 2.31 million tons annually, with polypropylene capacity at 1.59 million tons/year and polyethylene capacity at 0.72 million tons/year. The consolidated net sales will amount to 387.3 billion yen (for fiscal year 2024), with projected annual cost savings exceeding 8 billion yen.
According to data from Ministry of Economy, Trade and Industry, as of the end of December 2024, Japan¡äs total polyolefin production capacity had reached 5.83 million tons. After Sumitomo Chemical¡äs polypropylene and LLDPE businesses were integrated into PRM, they will account for over 30% of the domestic plastic production capacity.
In recent years, weak domestic demand in Japan has dragged down the petrochemical industry, prompting Japanese chemical companies to accelerate the integration of traditional petrochemical sectors. For instance, Idemitsu Kosan and Mitsui Chemicals jointly announced on December 19 that they have reached a final agreement to consolidate their ethylene production operations in Chiba, Japan, which includes the shutdown of a 370,000-ton-per-year ethylene unit.