Sumitomo Chemical to Restructure Caprolactam Operations at Ehime Works

May. 12, 2014

Sumitomo Chemical has decided to close down one of its two caprolactam (CPL) production lines towards end 2015 to strengthen the competitiveness of its CPL business. Following the closure, the Company will engage in the business with optimized capabilities of supply from production at the remaining production line along with procurement of the product from third parties.

Sumitomo Chemical has been producing CPL at its two production lines, one based on the liquid-phase process, and the other employing the vapor-phase process. The liquid-phase production line began operations at the Company's Ehime Works in 1965 with its production capacity expanded several times. It has been in operation for nearly fifty years now, and its cost competitiveness is no longer as good as desired in terms of maintenance and repair work required. In light of the prevailing globally competitive operating environment for CPL, driven by a number of capacity expansions coming on stream in emerging countries in recent years as well as flagging market conditions, Sumitomo Chemical has been examining every possible way of strengthening the competitiveness of its CPL business. As a result, it has decided to improve the business structure by closing down its decades-long liquid-phase production line. Incidentally, about 40 employees working on this production line will be relocated to different positions or otherwise provided with continued employment in the most appropriate manner.

After closure of the liquid-phase production line, the Company will continue operations with its highly-competitive vapor-phase production line that embodies Sumitomo Chemical’s proprietary advanced technological expertise. The vapor-phase process, which Sumitomo Chemical was the first in the world to operate on an industrial scale, has the distinctive advantage of producing high-quality CPL without by-producing ammonium sulfate. Going forward, Sumitomo Chemical will make continued efforts to improve the competitiveness of its CPL business by further streamlining and improving the production process while at the same time building an optimal organization for production, sales, and research that can respond flexibly to market developments.

Outline of Sumitomo Chemical’s Caprolactam Production Lines

1. Liquid-phase production line (scheduled to close down by end 2015)

Operation Start-up	April 1965
Annual production capacity	95,000 tons

2. Vapor-phase production line

Operation Start-up	June 2003
Annual production capacity	85,000 tons

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