By Daiki Kawasaki / Yomiuri Shimbun Staff Writer

Three major Japanese petrochemical companies -- Asahi Kasei Corp., Mitsui Chemicals Inc. and Mitsubishi Chemical Corp. -- on Tuesday announced that they will restructure their ethylene production in western Japan.

Asahi Kasei and Mitsubishi Chemical will shut down a plant they operate together in Okayama Prefecture around fiscal 2030, which ends March 2031. The three companies will then jointly operate Mitsui Chemicals' plant in Osaka Prefecture.

By consolidating their manufacturing facilities, the three companies aim to improve profitability amid a downturn in the ethylene market caused by overcapacity in China.

In May 2024, Asahi Kasei, Mitsui Chemicals and Mitsubishi Chemical announced that they would "examine future optimal production structures" for their ethylene production facilities in western Japan.

The plant in Kurashiki, Okayama Prefecture, has an annual production capacity of 496,000 tons. When ethylene production is limited to the plant in Takaishi, Osaka Prefecture, annual production capacity will fall by more than 50%, from 951,000 tons to 455,000 tons. The chemical will continue to be supplied to customers in the Kurashiki area by sea and other transport means, according to the companies.

Ethylene is a fundamental building block used to create various plastics and materials, and is primarily produced by cracking naphtha derived from crude oil. It is processed into a wide range of products such as food packaging and semiconductors.

However, ethylene plants in Japan have been producing less of the chemical in recent years because of shrinking demand caused by the declining population and oversupply from Chinese companies. According to the Japan Petrochemical Industry Association, domestic plants have been turning out only around 80% of their production capacity in recent years, well below the 90% benchmark regarded as an indicator of robust performance. As a result, there is a growing trend toward restructuring ethylene production in Japan. For example, Idemitsu Kosan Co. has decided to shut down its plant in Chiba Prefecture in July 2027 and confine production to a plant it jointly operates with Mitsui Chemicals in the same prefecture.

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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.

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January 28, 2026 03:44 ET (08:44 GMT)

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