Three major Japanese petrochemical companies, Mitsui Chemicals Inc, Idemitsu Kosan Company, and Sumitomo Chemical Company, have recently announced a landmark agreement to merge their domestic plastics production operations. This strategic move comes in response to the challenges posed by oversupply in the market and increasing competition from Chinese manufacturers.
The focus of this merger will be on consolidating their polyolefins operations, which include polyethylene and polypropylene, the essential raw materials used in the manufacturing of a wide range of plastic products. These products span from everyday items like plastic bags to more sophisticated components used in automobiles, consumer electronics, and medical devices.
Mitsui and Idemitsu have confirmed plans to integrate their Prime Polymer Company polyolefin joint venture with Sumitomo Chemical’s polypropylene and linear low-density polyethylene (LLDPE) business in Japan. The merger is expected to be finalized by April 2026, with Mitsui holding a 52% stake in the new entity, Idemitsu owning 28%, and Sumitomo Chemical having a 20% share. The companies anticipate cost savings of approximately JPY 8 billion annually as a result of this collaboration.
As part of the merger, some facilities will be closed down to address the issue of overcapacity in the market. Factors contributing to this oversupply include a shrinking domestic market due to population decline and changing lifestyle preferences, as well as increased competition from Chinese producers. Japan’s Ministry of Economy, Trade, and Industry estimates the country’s current total polyolefin production capacity at 5.8 million tons.
In a statement during an online press conference, Mitsui Chemicals president Osamu Hashimoto emphasized the importance of strengthening their business foundation through collaboration with other industry players. This merger is seen as a strategic move to enhance competitiveness, drive efficiencies, and navigate the evolving landscape of the plastics industry.
This development underscores the dynamic nature of the petrochemical sector, where companies are seeking innovative ways to optimize operations, streamline costs, and enhance market position. By joining forces, these three Japanese giants aim to create a stronger, more resilient entity that is better equipped to meet the challenges and capitalize on the opportunities in the global plastics market.
