Integration: Mitsui, Idemitsu Kosan, Sumitomo Chemical to integrate PO businesses in Japan

Three major Japanese chemical suppliers have entered into an MoU to integrate their polyolefin (PO) businesses in Japan to strengthen their competitiveness in the industry, against the influx of cheaper imports from China. An MoU was recently inked between Mitsui Chemicals, Idemitsu Kosan Co and Sumitomo Chemical Co to integrate the PO business operated by Prime Polymer Co, a joint venture between Mitsui and Idemitsu, with Sumitomo Chemical’s polypropylene (PP) business and linear low-density polyethylene (LLDPE) business in Japan.

Mitsui, Idemitsu and Sumitomo Chemical have explored the opportunities for collaboration to strengthen the competitiveness of the domestic PO business, including PP and polyethylene (PE), and have reached a mutual understanding, the statement adds.

Prime Polymer was set up in 2005 and is a leading producer of POs in Japan. After integration in April 2026, it is expected that Mitsui will have a 52% share in Prime; Idemitsu: 28% and Sumitomo Chemical: 20%, with the company to acquire a stake in Prime.

The combined entity will have a domestic production capacity of 1.59 million tonnes/year of PP and 720,000 tonnes/year of PE, up from 1.26 million tonnes/year of PE and 550,000 tonnes/year of PP.

The plastic businesses of Sumitomo Chemical, ranked fourth in production capacity in the country, will be integrated into Prime Polymer, with the resulting entity to account for over 30% of domestic production.

While some PE/PP facilities will be shut down as part of the merger, the companies said employment will not be affected.

The implementation of the integration is subject to the completion of necessary clearances, regulatory permissions and approvals under competition laws and other relevant laws and regulations.

Going forward, Mitsui, Idemitsu, and Sumitomo Chemical said they will continue discussions toward the conclusion of a definitive agreement for the integration.

PO, which accounts for approximately 50% of the demand for plastics in Japan, is a material used in a wide range of applications including automobiles, electronic materials, and medical devices, making itself essential to Japanese industry.

Although domestic PO manufacturers have undergone mergers and consolidations since the 1990s, the issue of oversupply has yet to be resolved. Due to the shrinking market caused by population decline and changes in lifestyle, the demand for domestically produced PO is expected to decrease even further in the future.

Through the integration, the three companies say they will work together to optimise the PO production system, with the goal of achieving cost rationalisation of more than 8 billion yen per year, thereby further strengthening their competitiveness.

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