Maruzen Corporation, a subsidiary of Cosmo Energy Holdings, announced on October 28^th its plans to consolidate its Ethylene production facilities in Ichihara City, Chiba Prefecture, due to ongoing sluggish domestic demand. The company will shut down one of its plants by the end of fiscal year 2026 and concentrate production at another facility it operates in a joint venture with Sumitomo Chemical.

The plant slated for closure has an annual production capacity of 525,000 tons of Ethylene, a key raw material in the production of plastics, while the plant remaining operational is one of the largest Ethylene production sites in Japan, with an annual capacity of 768,000 tons.

The decision comes in response to a persistent decline in domestic demand for Ethylene, exacerbated by structural factors such as Japan’s shrinking population and an increase in Ethylene production from China. In October alone, domestic Ethylene prices in Japan dropped by 1.9%, further contributing to the excess production capacity in the Japanese market. As a result, Maruzen and other petrochemical producers are reassessing their production strategies to adjust to this downturn.

Japan’s petrochemical industry, including key players like Maruzen, is facing what is described as a structural surplus in production capacity including Ethylene. Over the years, the country has built a network of Ethylene plants, many of which now operate below full capacity due to weakening domestic demand and increasing competition from overseas producers, particularly from China, which has significantly ramped up its production of Ethylene. To address this imbalance, companies across the industry are actively consolidating their operations, focusing on the most efficient and productive facilities.

The move by Maruzen is in line with Japan’s Ethylene industry, where many producers are looking to optimize their facilities and reduce redundant capacity in response to these shifting market dynamics. As Japan faces a decline in population and slower economic growth, the petrochemical industry must adjust to maintain competitiveness, with a strong focus on operational efficiency and sustainability.

Maruzen’s consolidation plan also reflects broader efforts to streamline the nation’s petrochemical sector, which includes the reduction of the 12 production facilities located in key regions like Chiba Prefecture and Setouchi. The company’s decision to increase its stake in the joint venture facility underscores a strategy to consolidate resources and focus on the most profitable and sustainable production assets.

As the global petrochemical landscape continues to evolve, the Japanese petrochemical markets are shifting toward a more concentrated and efficient industry structure, adapting to both domestic and international challenges.