Japan’s Mitsui, Idemitsu & Sumitomo to integrate polyolefin businesses

Mitsui Chemicals, Inc. (head office: Chuo-ku, Tokyo; President & CEO: Osamu Hashimoto; hereinafter “Mitsui”), Idemitsu Kosan Co.,Ltd. (head office: Chiyoda-ku, Tokyo; Representative Director and President: Noriaki Sakai; hereinafter “Idemitsu”), and Sumitomo Chemical Co., Ltd. (head office: Chuo-ku, Tokyo; Representative Director and President: Nobuaki Mito; hereinafter “Sumitomo Chemical”) hereby announce that Mitsui, Idemitsu, and Sumitomo Chemical have entered into a Memorandum of Understanding (“MOU”) concerning the integration of the polyolefin (PO) business operated by Prime Polymer Co., Ltd. (head office: Chuo-ku, Tokyo; President: Fumio Yoshizumi; hereinafter “PRM”), a joint venture between Mitsui and Idemitsu, with Sumitomo Chemical’s polypropylene (PP) business and linear low-density polyethylene (LLDPE) business in Japan (collectively “Sumitomo Target Business”) (such integration, the “Business Integration”). 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 as set forth in the MOU.

Mitsui Chemicals, Idemitsu Kosan, and Sumitomo Chemical have signed an MoU to integrate Prime Polymer’s polyolefin business with Sumitomo’s polypropylene and LLDPE businesses in Japan.
The move aims to tackle oversupply, boost competitiveness against imports, cut costs by ¥8 billion (~$54.27 million) annually, and drive development of high-performance, eco-friendly products for a sustainable future.

The implementation of the Business 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 will continue discussions toward the conclusion of a definitive agreement for the Business Integration.

1. Background and Purpose of the Business 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.

Since establishment in 2005 as a joint venture between Mitsui and Idemitsu, PRM has been a leader in the Japanese PO industry, with PP and PE (LLDPE and high-density polyethylene (HDPE)) as its main products. PRM and Sumitomo Chemical have a shared understanding that integrating Sumitomo Chemical’s PP and LLDPE businesses in Japan into PRM will not only strengthen the domestic PO business but also enhance the competitiveness against imported products. The Business Integration is expected to generate significant synergies both in the production of PRM and Sumitomo Chemical, both having operating bases in the Keiyo region of Japan, and in the development of technologies to reduce environmental impact.

Through the Business Integration, Mitsui, Idemitsu, and Sumitomo Chemical will work together to optimize the PO production system, with the goal of achieving cost rationalization of more than 8 billion yen per year, thereby further strengthening their competitiveness as resilient and essential companies. Furthermore, by enhancing their capabilities to develop high-performance and environmentally conscious products, Mitsui, Idemitsu, and Sumitomo Chemical will accelerate efforts to realize a sustainable green chemical business.

Note: The headline, insights, and image of this press release may have been refined by the Fibre2Fashion staff; the rest of the content remains unchanged.

ALCHEMPro News Desk (HU)