Idemitsu Kosan and Mitsui Chemicals Enter FEED Phase for Chiba Ethylene Complex Consolidation

Idemitsu Kosan Co., Ltd. (Tokyo: 5019) and Mitsui Chemicals, Inc. (Tokyo: 4183) have been exploring ways to optimize production by consolidating their ethylene complexes in Chiba. Following the completion of a feasibility study (FS), the companies are now advancing to the next stage: front-end engineering and design (FEED). Since 2010, Idemitsu and Mitsui have collaborated under a limited liability partnership (LLP) called Chiba Chemicals Manufacturing LLP, jointly operating their ethylene facilities to maximize production synergies.

However, Japan's ethylene industry has faced challenges due to the expansion of large petrochemical complexes, particularly in China, coupled with declining domestic demand for ethylene. This has forced Japanese ethylene complexes to operate at reduced capacity, and the domestic petrochemical business environment is expected to remain difficult. In response to these challenges, Idemitsu and Mitsui conducted a feasibility study to evaluate the consolidation of their ethylene facilities into a single unit at Mitsui’s Chiba site, a plan initially announced on March 27, 2024.

The feasibility study analyzed the impacts of consolidation on feedstock procurement, production, and supply chains. With positive results, both companies have agreed to proceed to the FEED phase, where they will further explore the technical and operational aspects of the consolidation.

The key aspects of the consolidation plan include a targeted completion by fiscal 2027, with production to be fully consolidated at Mitsui’s facility following the closure of Idemitsu’s ethylene plant. Both companies will continue to supply feedstock to the Limited Liability Partnership (LLP) that operates the facility, ensuring a steady flow of materials for the production of various chemical fractions, including ethylene, propylene, and C4. The business structure will remain unchanged, with the LLP overseeing joint operations at Mitsui’s site. A final decision on the consolidation is anticipated in the latter half of fiscal 2025, after the front-end engineering and design (FEED) phase has been completed.

The companies will intensify their efforts during the FEED phase to improve production efficiency and enhance competitiveness at their consolidated Chiba facility. After completing FEED, further discussions will take place to make a final decision on the merger of their ethylene operations, with the goal of strengthening their position in the challenging petrochemical market.

Chiba Chemicals Manufacturing LLP, established on April 1, 2010, is a joint venture between Idemitsu Kosan and Mitsui Chemicals, each holding a 50% stake with a capital contribution of 200 million yen. Headquartered at Marunouchi 3-1-1, Chiyoda-ku, Tokyo, the LLP operates a joint ethylene complex in Chiba, where it manufactures ethylene, propylene, and other chemical fractions. These products are supplied to both Idemitsu and Mitsui. The ethylene production capacity of the facility is 920,000 tons per year, with 370,000 tons attributed to Idemitsu and 550,000 tons to Mitsui, based on the year of scheduled maintenance.