Integration/Insolvency: Sumitomo Chemical integrates PP/LLDPE businesses into Prime; Leuna-Polyamid files for insolvency

Japan’s Sumitomo Chemical Co., Ltd. said its business integration covering polypropylene (PP) and linear low-density polyethylene (LLDPE) operations in Japan became effective on July 1, 2026, putting the first phase of a planned two-step company split into operation.

Under the arrangement, the target PP and LLDPE businesses are to be transferred to Prime Polymer Co, a joint venture of Mitsui Chemicals and Idemitsu Kosan Co, Sumitomo Chemical said it will acquire equity equivalent to a 20% stake in Prime Polymer as part of the integration.

Sumitomo Chemical said in a disclosure that the necessary clearances, regulatory permissions and approvals under competition laws and other relevant regulations had been obtained. The business integration agreement, joint venture agreement and first absorption-type company split agreement became effective from July 1, 2026.

The agreements involve Sumitomo Chemical, Prime Polymer, Mitsui Chemicals and Idemitsu Kosan. Sumitomo Chemical said it had announced the business integration and joint venture agreements last year, and entered into the first-phase absorption-type company split agreement with Prime Polymer in April 2026.

Each stage is structured as a simple absorption-type company split. Sumitomo Chemical said each phase is expected to reduce its total assets by less than 10% of net assets as of the end of the immediately preceding fiscal year, and net sales by less than 3% of net sales for that fiscal year.

Sumitomo Chemical said approval and conclusion of the second-phase agreement are planned for January 2027, with the second phase scheduled to take effect on April 1, 2027.

Meanwhile, Germany-based caprolactam and polyamides producer Leuna-Polyamid has filed for insolvency less than three months after the business was acquired from Domo Chemicals. The bankruptcy comes after a consortium rescued the site from Domo’s previous insolvency, driven by surging input costs and supply shortages

Formed in early April when chemical park operator InfraLeuna and epoxy producer Leuna-Harze purchased the company from Domo, the new company faced liquidity issues due to deteriorating economic conditions and surging prices.

The joint venture consortium originally acquired the business in a bid to maintain the cohesion of the Leuna park after DOMO Chemical filed for insolvency for three German subsidiaries.

Sudden dramatic shifts in the economic environment brought on by the US-Iran conflict resulted in prices for inputs including sulphur benzene and propylene increasing 60-100%, the company said, with product also proving difficult to source.

“The supply of sulphur, which is essential for production, was not ensured to a sufficient extent, which further restricted the utilization of the production facilities,” company managing director Martin Naundorf said in the letter.

“This led to a significantly increased liquidity requirement in the operating business,” he added.

Naundorf told ICIS that the court had yet to respond to the application and that the co-owners may seek additional investment in the business.

“We will use the time under the umbrella of the insolvency process to improve our structure further and look for additional partners for the business in Leuna,” he said.

The company’s plants operated profitably in April and May, according to Naundorf, but the business had yet to build up the financial reserves necessary to absorb the price shocks.

Existing orders will be met, and new orders will be reviewed during the insolvency proceedings, the company added.

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