Idemitsu Kosan and Mitsui Chemicals announce FEED phase for Chiba Ethylene Plant merger

Idemitsu Kosan and Mitsui Chemicals have been exploring ways to optimize production by integrating their ethylene complex in Chiba. After completing a feasibility study (FS), the two companies are now entering the next phase: FEED.

Since 2010, Idemitsu Kosan and Mitsui Chemicals have collaborated under the limited liability partnership (LLP) of Chiba Chemical Manufacturing Co., Ltd. to jointly operate their ethylene facilities to maximize production synergies.

The Japanese ethylene industry faces challenges due to the expansion of large petrochemical complexes worldwide and the decline in domestic demand for ethylene in Japan. This has forced Japan's ethylene complexes to reduce production capacity, and the future of Japan's petrochemical business will remain difficult. To address these challenges, Idemitsu and Mitsui conducted a feasibility study to evaluate the integration of their ethylene facilities as a unit of the Mitsui Chiba Plant, a plan initially announced on March 27, 2024.

The feasibility study analyzed the impact of the integration on feedstock sourcing, production and supply chain. Given the positive results, the two companies have agreed to enter the FEED phase, where they will further explore the technical and operational aspects of the integration.

Key aspects of the plan include: completion of the merger by fiscal 2027; production will be fully integrated into the Mitsui plant after the closure of the Idemitsu ethylene plant. The two companies will continue to supply feedstock to the limited liability partnership that operates the plant, ensuring a steady flow of chemical fraction materials such as ethylene, propylene and C4. The business structure will remain unchanged, and the LLP will be responsible for overseeing the joint operations of the Mitsui plant. The final decision on the merger is expected to be made in the second half of fiscal 2025, after the completion of the front-end engineering and design (FEED) phase.

The two companies will intensify their efforts in the FEED phase to improve the production efficiency and competitiveness of their combined Chiba plant. After the completion of FEED, a final decision will be made on the merger of the ethylene business, with the goal of strengthening its position in the challenging petrochemical market.

Chiba Chemical Manufacturing Co., Ltd. was established on April 1, 2010 as a joint venture between Idemitsu Kosan and Mitsui Chemicals, with each party holding a 50% stake and a capital contribution of 200 million yen. The company is headquartered in Tokyo and operates a joint venture ethylene complex in Chiba, producing ethylene, propylene and other chemical fractions. These products are supplied to Idemitsu Kosan and Mitsui Chemicals. According to the planned maintenance year, the plant's ethylene production capacity is 920,000 tons per year, of which Idemitsu Kosan produces 370,000 tons and Mitsui Chemicals produces 550,000 tons.