Three major Japanese petrochemical companies announced that have agreed to merge their domestic plastics production operations, as they look to improve their competitiveness due to oversupply and growing competition from Chinese manufacturers.

Mitsui Chemicals Inc, Idemitsu Kosan Company, and Sumitomo Chemical Company have signed a memorandum of understanding (MoU) to merge their polyolefins operations, as they look to share costs and develop synergies in areas such as R&D, production, sales and distribution. Polyolefins, including polyethylene and polypropylene, are the raw materials used in the production of plastic products, from plastic bags to components for automobiles, consumer electronics, and medical devices.

Mitsui and Idemitsu confirmed that they have agreed to integrate their Prime Polymer Company polyolefin joint venture with Sumitomo Chemical’s polypropylene and linear low-density polyethylene (LLDPE) business in Japan, with the merger scheduled to be completed by April 2026.  The companies estimate that the merger will bring cost-savings of around JPY 8 billion per year. Mitsui will control 52% of the new company, while Idemitsu will have a 28% stake and Sumitomo Chemical 20%.

Some facilities will be shut down to help reduce overcapacity, which has been blamed on a shrinking domestic market due to population decline and changes in lifestyle, as well as oversupply from Chinese producers. Japan’s Ministry of Economy, Trade and Industry, estimates the country’s current total polyolefin production capacity at 5.8 million tons.

Mitsui Chemicals president, Osamu Hashimoto, speaking at an online press conference, stated: "We are at the stage where we must strengthen our business base through collaboration with other companies."