Prime Polymer, Sumitomo Chemical to Combine Polyolefin Businesses

Faced with a declining domestic market and global overcapacity throughout the plastics industry, Mitsui Chemicals, Idemitsu Kosan and Sumitomo Chemical have signed a Memorandum of Understanding (MOU) concerning the integration of their polyolefin (PO) businesses. Prime Polymer, a joint venture of Mitsui Chemicals and Idemitsu, operates the PO business of these partners. If the merger goes ahead, the plan is to complete business integration within fiscal year 2026, which concludes in March 2027.

Specifically, Sumitomo Chemical’s polypropylene (PP) and linear low-density polyethylene (LLDPE) businesses would be integrated into the operations of Prime Polymer.

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, Prime Polymer has been a leader in the Japanese PO industry, with PP and PE (LLDPE and high-density polyethylene (HDPE)) as its main products. Prime Polymer 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 Prime Polymer 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 JPY8 billion ($54 million) 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.

While details of the integration method and the terms and conditions of the Business Integration have yet to be determined, Mitsui, Idemitsu, and Sumitomo Chemical are considering a method that Sumitomo Chemical transfers the Sumitomo Target Businesses to Prime Polymer, and Sumitomo Chemical acquires the shares equivalent to a 20% stake in Prime Polymer. Mitsui Chemical will have a 52% stake in the merged entity, and Idemitsu the remaining 28%.

Production capacities will be transformed as follows:

• Before integration: PP: 1.26 million tonnes/year; PE: 0.55 million tonnes/year;

• After integration; PP: 1.59 million tonnes/year; PE: 0.72 million tonnes/year

Combined revenue of the merged entity is estimated at $2.63 billion.