Japan’s polyolefin leaders move to consolidate domestic operations

Mitsui Chemicals, Idemitsu Kosan, and Sumitomo Chemical have signed a memorandum of understanding (MOU) to integrate Sumitomo’s PP and LLDPE operations into Prime Polymer Co Ltd (PRM), a joint venture between Mitsui and Idemitsu. The move seeks to strengthen cost competitiveness, enhance technological collaboration, and reinforce Japan’s position in an increasingly constrained polyolefin market.

Under the proposed agreement, Sumitomo Chemical will transfer its domestic PP and LLDPE businesses to PRM in exchange for a 20% stake, adjusting the shareholding structure to Mitsui 52%, Idemitsu 28%, and Sumitomo 20%. The transaction is expected to be completed by April 2026, pending regulatory approval.

The consolidation responds to persistent structural challenges in Japan’s polyolefin industry, which accounts for roughly half of national plastic demand. Despite multiple rounds of consolidation since the 1990s, domestic producers continue to face oversupply and declining demand amid demographic contraction and changing consumption patterns. By combining operations, the companies aim to achieve annual cost rationalisation exceeding 8 billion yen through production and logistics efficiencies.

Following the integration, PRM’s domestic production capacity will increase to 1.59 million tons per year for PP and 0.72 million tons for PE, up from 1.26 million tons and 0.55 million tons respectively. Combined net sales for the merged businesses reached approximately 387.3 billion yen in the 2024 fiscal year, positioning PRM among Japan’s largest polyolefin producers.

The partners expect to leverage shared production bases in the Keiyo region to generate operational synergies and advance development of high-performance, low-carbon polyolefins. The move is also designed to enhance competitiveness against lower-cost imports from regional suppliers in Asia and the Middle East.

The planned integration reflects a broader strategic shift within Japan’s petrochemical sector—away from volume-driven output and toward value-added, environmentally aligned production models. If executed as planned, PRM will emerge as a more resilient and sustainable player in the domestic and regional polyolefin markets.

Written: Aiman Haikal