Mitsui Chemical transfers equity, Sinopec takes over the phenol, acetone business!

In 2025, the global chemical industry is changing, and a series of major strategic adjustment events have aroused widespread concern. Among them, Japanese chemical giant Mitsui Chemical announced a board resolution on June 24 to transfer all its 50% equity in Sinopec Mitsui Chemical Co., Ltd. (SSMC) to Sinopec's Shanghai Gaoqiao Petrochemical Co., Ltd., and the transaction is expected to be completed in October of that year. This action is not only related to the company's own strategy, but also reflects the profound changes in the global chemical industry.

Sinopec Mitsui Chemical was established in 2006 and mainly produces basic chemical products such as phenol, acetone and bisphenol A. In the course of its development, the first phase of 120000 tons/year bisphenol A plant and the second phase of the project with an annual output of 250000 tons of phenol and 150000 tons of acetone have laid the foundation for the development of the enterprise. However, in recent years, the phenol/acetone market capacity has expanded rapidly, and the market pattern of oversupply has led to a significant compression of profit margins. Data show that the company lost as much as 10.6 billion yen in fiscal year 2025, and the continued decline in performance became the direct reason for Mitsui Chemicals to choose to withdraw.

In fact, the adjustment of Mitsui Chemicals is not an isolated event. In 2023, Mitsui Chemicals has transferred all the shares of a merged subsidiary operating phenol business in Singapore. In 2024, it was decided to close the 190000-ton/year phenol plant in Chiba City by fiscal year 2026. Last month, Mitsui Chemicals also announced that it had decided to begin considering splitting its Fundamental and Green Materials business ("B & GM"), which is primarily engaged in petrochemicals. The scope of the business is broad and covers several areas:

petrochemical products: including ethylene, propylene, high density polyethylene, metallocene linear low density polyethylene (Evolue®), linear low density polyethylene, polypropylene, olefin polymerization catalysts.

Basic chemicals: phenol, bisphenol A, acetone, isopropanol, methyl isobutyl ketone, purified terephthalic acid, PET resin, ethylene oxide, ethylene glycol, hydroquinone, m/p-cresol, ammonia, urea, melamine.

Polyurethane raw materials: TDI(Cosmonate®), MDI(Cosmonate®), PPG(Actocol®, Econikol®), of which Mitsui Chemicals has MDI capacity of 610000 tons/year and TDI capacity of 128000 tons/year.

Coincidentally, INEOS Phenol, the world's largest producer of phenol and acetone, announced on June 17, 2025 that it plans to permanently stop its phenol production site in Gladbeck, Germany. This series of actions shows that the global basic chemical industry is facing a severe overcapacity crisis. In order to cope with the market pressure, enterprises have to maintain their survival and development by shrinking or adjusting their production capacity. Overcapacity has led to fierce market competition, product prices have fallen, and corporate profit margins have been compressed. The huge losses of companies like Sinopec Mitsui Chemical are typical examples.

The strategic adjustment of foreign-funded enterprises is both a challenge and an opportunity for China's chemical industry.

Challenges: The withdrawal of foreign capital from the basic chemical sector may bring short-term market volatility. Foreign-funded enterprises have certain advantages in technology, management and market channels. Their withdrawal may lead to changes in the market supply pattern. In the short term, the market supply and demand balance will be impacted, and price fluctuations may intensify, which will bring certain operating pressure to domestic related enterprises.

Opportunities: China's chemical industry has gained more independent development space. Especially in the fields of high-end materials and fine chemicals, domestic enterprises can fill the market gap by strengthening R & D investment and industrial upgrading. With the withdrawal of foreign capital, domestic enterprises have the opportunity to integrate resources, expand market share, upgrade technology and enhance international competitiveness. For example, in the fields of high-end polyurethane materials and specialty chemicals, domestic enterprises can increase research and development efforts, break through technical bottlenecks, and realize import substitution.

The withdrawal of Mitsui Chemical from Sinopec Mitsui Chemical is not only a strategic choice of an enterprise, but also an inevitable evolution of the global chemical industry under the background of overcapacity and technological change. With the deepening of industry integration and transformation, more enterprises will reposition themselves according to their own advantages in the future. Some companies may focus on the R & D and production of high-end and special chemical products to increase the added value of their products; others may achieve scale expansion through mergers and acquisitions to improve market competitiveness.

For China's chemical industry, this process will accelerate its growth and move towards a high-quality development stage. Domestic enterprises should seize the opportunity, increase investment in technological innovation, optimize the industrial structure, improve the level of the industrial chain, actively participate in international competition, and occupy a favorable position in the reshaping of the global chemical industry pattern.