Wedoany.com Report-Dec.27, On December 24, Mitsui Chemicals, Idemitsu Kosan, and Sumitomo Chemical announced that they have reached a definitive agreement to jointly create a robust polyolefins manufacturer.

Previously, on September 10, these three Japanese chemical giants jointly announced that they had signed a memorandum of understanding to integrate the polyolefins business operated by Prime Polymer Co., Ltd. (referred to as "PRM"), which is jointly invested by Mitsui Chemicals and Idemitsu Kosan, with Sumitomo Chemical's polypropylene (PP) and linear low-density polyethylene (LLDPE) business in Japan.

Polyolefins account for about 50% of Japan's plastic demand and are crucial to Japanese industry. Since the 1990s, although Japanese polyolefin manufacturers have undergone consolidation, the issue of oversupply remains unresolved. The three companies stated that due to shrinking market demand caused by Japan's declining population and changing lifestyles, demand for polyolefins is expected to decline further in the future.

According to the agreement, Sumitomo Chemical will transfer its PP and LLDPE business in Japan to PRM in two phases. In the first phase, excluding production functions, Sumitomo Chemical will acquire a 20% stake in PRM, planned to be completed by July 1, 2026. At that time, Mitsui & Co. will hold a 52% stake in PRM, Idemitsu Kosan will hold 28%, and Sumitomo Chemical will hold 20%. The second phase will involve the transfer of production-related assets and liabilities, planned to be completed by April 1, 2027.

PRM is a joint venture established by Mitsui Chemicals and Idemitsu Kosan in 2005. It currently has an annual production capacity of 1.26 million tons of polypropylene and 550,000 tons of polyethylene, making it a major producer of polyolefin products in Japan.

Upon completion of the entire integration, PRM's total polyolefins capacity will reach 2.31 million tons per year, including 1.59 million tons per year of polypropylene capacity and 720,000 tons per year of polyethylene capacity. The combined net sales are projected to reach 387.3 billion yen (based on fiscal year 2024), with expected annual cost savings exceeding 8 billion yen.

According to data from Japan's Ministry of Economy, Trade and Industry, Japan's total polyolefins production capacity was 5.83 million tons as of the end of December 2024. After integrating Sumitomo Chemical's PP and LLDPE business, PRM will account for over 30% of the domestic plastics production capacity.

In recent years, sluggish domestic demand in Japan has weighed on the petrochemical industry, prompting Japanese chemical companies to accelerate the pace of consolidation in the traditional petrochemical sector. For example, on December 19, Idemitsu Kosan and Mitsui Chemicals jointly announced that the two companies have reached a definitive agreement to integrate ethylene production operations in Chiba, Japan, which includes shutting down a 370,000-ton-per-year ethylene plant.