Japanese Chemical Giants Merge Polyolefins Units to Combat Oversupply

Sumitomo Chemical Co. said it will integrate its polypropylene business and linear low-density polyethylene businesses into Prime Polymer Co., a Mitsui Chemicals Inc. and Idemitsu Kosan Co. joint venture, to strengthen Japan’s domestic polyolefins market. 

Japan’s polyolefins industry is contending with oversupply and a shrinking domestic market caused by population decline and lifestyle changes, according to a statement released by the companies Sept. 10.

Sumitomo’s  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.

The business integration is expected to generate significant synergies both in the production operations of Prime Polymer and Sumitomo Chemical, with both companies having operating bases in the Keiyo region of Japan, the companies stated.

The three companies signed a memorandum of understanding for the deal, which would give Sumitomo Chemical a 20% stake in Prime Polymer. Mitsui would hold 52% and Idemitsu 28% after the transaction.

The companies expect the integration to deliver cost savings of more than 8 billion yen (approx. $54 million) annually through production optimization. Combined domestic capacity would reach 1.59 million tons per year for polypropylene and 720,000 tons for polyethylene, up from 1.26 million tons per year and 550,000 tons per year, respectively.

The deal is scheduled to close in April 2026, pending regulatory approvals. The integrated business would generate net sales of 387.3 billion yen ($2.6 billion) based on fiscal 2024 figures.