Asahi Kasei will cut petrochemical output in Japan, citing weak demand, low competitiveness, decarbonization goals, and industry-wide restructuring pressures.
Asahi Kasei has announced a significant restructuring of its petrochemical derivatives operations at its Mizushima Works, with plans to sharply scale back production by fiscal year 2030. This strategic move involves discontinuing domestic production of styrene monomer (SM) and polyethylene (PE), reducing acrylonitrile (AN) capacity, and ceasing domestic production of polycarbonate diol (PCD). The company aims to manage a four-year transition period to ensure stable supply for customers while they switch to alternative products.
The primary drivers behind this decision are deeply rooted in structural challenges facing Japan's petrochemical industry. Asahi Kasei cited persistently low operating rates, a long-term decline in domestic demand stemming from Japan's decreasing population, and diminished competitiveness in the crucial East Asian export market. Furthermore, the company is responding to increasing public and industry expectations for progress toward carbon neutrality, necessitating a shift away from petroleum-dependent processes.
The consequences of this restructuring are far-reaching, impacting economic, geopolitical, and industry-specific landscapes. Economically, Asahi Kasei anticipates strengthening its overall profitability, enhancing capital efficiency, and streamlining its Material sector portfolio by exiting businesses that have become inherently unprofitable. The businesses targeted for discontinuation or reduction generated approximately ¥116.2 billion in revenue in fiscal 2025. This reallocation of capital is intended to support higher-value opportunities within the company's diverse portfolio.
From an industry perspective, Asahi Kasei's actions are part of a broader trend of consolidation within Japan's petrochemical sector. The company believes that by exiting these operations, the operating rates of remaining facilities throughout Japan will increase, leading to a more robust and efficient petrochemical supply chain nationally. Geopolitically and strategically, the company is optimizing its global supply framework. For instance, AN supply will continue through its South Korean subsidiary, Tongsuh Petrochemical, and PCD production will be consolidated at overseas sites like Asahi Kasei Performance Chemicals in China. Crucially, Asahi Kasei is pivoting towards decarbonized basic chemicals by advancing its "Revolefin" technology, which produces ethylene and propylene from bioethanol. This initiative signifies a strategic move to reduce reliance on petroleum-based feedstocks and enhance its competitive position in a carbon-constrained global market. This shift aligns with Japan's broader industrial goals of decarbonization and establishing a sustainable petrochemical industry.
