Sumitomo Chemical Begins Study for Measures to Substantially Optimize the Operations of the Joint Venture Keiyo Ethylene, Including Changes to Offtake Ratio

Oct. 28, 2024

Sumitomo Chemical has made a proposal to Maruzen Petrochemical Co., Ltd. ("Maruzen Petrochemical"), its joint venture partner in Keiyo Ethylene Co. ("Keiyo Ethylene"), 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.

Reference

Overview of Keiyo Ethylene

Company name	Keiyo Ethylene Co., Ltd.
Capital	6,000 million yen
Percentage of ownership interest	Maruzen Petrochemical 55%, Sumitomo Chemical 45%
Product offtake ratio	Maruzen Petrochemical 40.6%, Sumitomo Chemical 59.4%
Established	September 1991
Started operations	December 1994
Ethylene production capacity	768,000 tons/year (capacity of ethylene production facility No. 4 for a year without scheduled shutdown maintenance)

Contact

Sumitomo Chemical Co., Ltd.
Corporate Communications Dept.
https://www.sumitomo-chem.co.jp/english/contact/public/