Japan Petrochemical Industry Restructuring Accelerates With Major Steam Cracker Merger Plan

• Mitsubishi Chemical, Asahi Kasei, and Mitsui Chemicals plan to merge their naphtha-fed steam crackers
• The Mizushima steam cracker will be scrapped, with production shifting to Osaka
• The merged cracker is expected to operate with a capacity of 455,000 metric tons per year
• Japan’s cracker operating rates have remained low since 2022 due to negative margins
• The merger is part of broader capacity reduction and restructuring across Japan’s petrochemical sector

Japan’s petrochemical industry is heading toward another major restructuring move as Mitsubishi Chemical, Asahi Kasei, and Mitsui Chemicals have agreed in principle to merge their naphtha-fed steam cracker operations. The three companies announced that the steam cracker in Mizushima will be scrapped, while production will be consolidated into a single facility in Osaka. This signals a significant shift as Japan’s producers respond to prolonged weak profitability and shrinking operating rates.

Mitsubishi Chemical and Asahi Kasei currently share ownership of the Mizushima cracker through their joint venture, Asahi Kasei Mitsubishi Chemical Ethylene Corp., formed in 2016. Mitsui Chemicals, meanwhile, operates its own naphtha-fed cracker in Osaka. Together, the two facilities represent a combined ethylene capacity of around 951,000 metric tons per year. Under the new plan, these operations will effectively be merged, with Osaka becoming the central hub.

The consolidated facility in Osaka is expected to have an ethylene production capacity of about 455,000 metric tons per year. The companies plan to establish a new joint venture to run the merged operation, though the future ownership structure has not yet been finalized. The merger itself is targeted for fiscal year 2030 to 2031, showing that this will be a long-term transition rather than an immediate closure.

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The decision reflects the difficult conditions facing Japan’s naphtha-fed steam cracker sector. Since 2022, these crackers have been running below full utilization due to negative margins. Data from the Japan Petrochemical Industry Association highlights how severe the downturn has been, with operating rates falling to an all-time low of 75.1% in March 2025. Even by the end of 2025, average operating rates remained weak, underscoring the lack of improvement in profitability.

Overcapacity has become a pressing issue for Japan’s petrochemical producers, forcing companies into capacity rationalization strategies. The merger of these crackers fits into a wider pattern of restructuring already underway across the country. Other announced plans include Maruzen Petrochemical’s intention to shut down its Chiba cracker in fiscal year 2026 to 2027, Idemitsu Kosan and Mitsui Chemicals consolidating ethylene production in Chiba in 2027, and ENEOS considering the decommissioning of one of its Kawasaki crackers by 2028.

The agreement between Mitsubishi Chemical, Asahi Kasei, and Mitsui Chemicals shows how Japan’s major petrochemical firms are moving toward fewer, more efficient production sites. As demand pressures and global competition continue to mount, the industry is increasingly focused on consolidation as a way to protect margins and secure long-term sustainability.