28-10-2024

Sumitomo Chemical proposes reducing offtake quotas for products at Keiyo Ethylene

Sumitomo Chemical has made a proposal to Maruzen Petrochemical Co Ltd, its joint venture partner in Keiyo Ethylene Co, to reduce offtake quotas for Sumitomo Chemical products at Keiyo Ethylene. Sumitomo Chemical and Maruzen Petrochemical have begun joint consideration of this proposal for substantial operational optimization at Keiyo Ethylene.

Sumitomo Chemical has been working on the structural reforms of its petrochemical business in Japan, which faces a challenging environment, with declining domestic demand and increasing imports. As part of the efforts, in 2015 the Company ceased operations of its ethylene production facility at Chiba Works, which was the only one it operated on its own. In addition, following this, Sumitomo Chemical has procured some basic feedstocks such as ethylene exclusively from Keiyo Ethylene, in which it has engaged as a joint partner.

However, considering the ongoing unfavorable business environment, which is expected to persist due to factors such as increased imports from China and sluggish demand both in and outside of Japan, Sumitomo Chemical has proposed to Maruzen Petrochemical a reduction in the volume of its product offtake from Keiyo Ethylene. Moving forward, Sumitomo Chemical and Maruzen Petrochemical will proceed with detailed studies based on a shared understanding that further reform is necessary to substantially optimize the operations of Keiyo Ethylene.

Sumitomo Chemical is currently implementing fundamental structural reforms to remain a company with global presence, and the revitalization of the petrochemical business is one of its highest priorities. By advancing business restructuring both in and outside of Japan, including collaborations with business partners, and steering towards value creation using technologies that reduce environmental impact, Sumitomo Chemical will strive to strengthen the revenue base of its Essential & Green Materials sector.