Three major Japanese petrochemical companies said Wednesday they have agreed to integrate their domestic businesses for the production of general-purpose plastics next April, as they seek to strengthen their competitiveness in the industry.
The memorandum of understanding inked by Mitsui Chemicals Inc., Idemitsu Kosan Co., and Sumitomo Chemical Co. comes as the market price of polyolefins, a collective term for polyethylene and polypropylene plastics used in items such as shopping bags and auto parts, has declined due to oversupply from China.
According to the Ministry of Economy, Trade and Industry, Japan's total production capacity of polyolefins stood at 5.83 million tons as of the end of December last year.
Prime Polymer Co., a joint venture between Mitsui Chemicals and Idemitsu Kosan established in 2005, is the leading producer of polyolefins in Japan.
The plastic businesses of Sumitomo Chemical, ranked fourth in production capacity, will be integrated into Prime Polymer, with the resulting entity to account for over 30 percent of domestic production.
"We are at the stage where we must strengthen our business base through collaboration with other companies," Mitsui Chemicals President Osamu Hashimoto said at an online press conference.
While some polyethylene and polypropylene production facilities will be shut down as part of the merger, the companies said employment will not be affected.
==Kyodo
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