Chemicals Division– Main Businesses & Vision –

Business Overview

Conducts trading business in liquid chemicals, mainly methanol; petrochemical products such as plastics; and inorganic chemicals including industrial salt, rare earths and mineral-related products.

【Main Products】

  1. Chemicals: Methanol, solvents, liquid chemicals, high-performance resin monomers, butadiene, phenol, raw materials for resins and synthetic fibers, raw materials for plastic resins, and plastic products
  2. Ecological Materials & Resources: Rare earths, lithium, aluminum hydroxide, industrial salt, graphite, cellulose materials, high-performance nonwoven cloth, raw materials for paint, liquid crystal, display materials, carbon fiber, LED materials, barite, etc.

Metton resin

Coordinating global sales of metton resin, a new environmentally friendly molding material made from dicyclopentadiene.
[Major Business Activities] DCPD Business

Methanol

Methanol manufacturing facilities in Indonesia
Manufacturing and providing a stable supply of methanol to the Japanese and Asian markets. Methanol has a rising demand for raw material in products such as adhesives, synthetic fibers, engineering plastics and energy applications.
[Major Business Activities] Methanol Business

Marine Chemicals (Industrial Salt)

Salt stock in India before shipment
Top class among trading companies in volume of industrial salt, a key basic raw material with broad applications. Our salt comes from India.
[Major Business Activities] Chlor-alkali Business

Rare Chemical Resources (Rare Earths, Lithium, Barite)

Neodymium iron boron alloy produced using rare earths
Barite mine in Mexico
Developing, producing, and providing a stable supply of barite and rare earths. The former has become an essential material in the shale gas revolution, while the latter are important resources used in everything from hybrid cars to LCD displays.
[Major Business Activities] Rare Earth Business

Plastic Resins

Braskem’s green polyethylene plant
Meeting growing plastic demand which accompanies the high economic growth of emerging nations.
Supporting sustainable society with green polyethylene, a plant-based polyethylene which is anticipated to lessen the effects of global climate change by reducing CO2 emissions, as well as help countries move away from their dependence on petroleum.
[Major Business Activities] Plastics Business
[Major Business Activities] Automotive Component-related Businesses
[Major Business Activities] OEM Business
[Major Business Activities] EMS(Electronics Manufacturing Service)Related Businesses
[Major Business Activities] Glass Fiber and Carbon Fiber Business
[Major Business Activities] Packaging Materials Business
[Major Business Activities] Green Plastic Business
[Major Business Activities] Green Chemicals and Monomers Business

Business Overview and Vision

Contributing to development by offering value that translates to growth for client companies and promoting circulation in industry

The chemicals industry can be called the lifeblood of industry. It is essential for promoting circulation in the many different industries around the globe, and there is no doubt that the markets of emerging countries, centered on Asia, will continue to grow.

Against this backdrop, the Chemicals Division’s role is to connect regions of the world and stimulate circulation. Our mission is to bring ideas to the market one after another to generate added value that achieves growth for client companies in each value chain.

Among our accomplishments to date that reflect this mission are: in clothing, the development of functional textile materials; in food, the provision of synthetic agrochemicals to increase food production and of food packaging materials; and in living, solar power generation and provision of related materials, as well as the improvement of vehicle fuel efficiency through the replacement of metal components with plastic components for automobile vehicle weight reduction. All of these accomplishments are the result of our efforts to provide solutions for our client companies as we work with them in their pursuit of new businesses and new products for further growth.

Strengths That Drive Value Creation

Industry-leading customer base cultivated by strengthening value chains

The Chemicals Division compares favorably to chemical divisions of competing trading companies in terms of scale, which is solely due to the extensive customer base that we have built by strengthening our value chains. Previously, Japanese businesses accounted for most of our client companies, but we now have dealings with customers around the world. With such a diverse customer base, we handle a wide variety of products and materials and have established value chains that extend from upstream to downstream sectors, which is another of our unique strengths.

Among our major advantages in specific businesses, the methanol business, which has a production base in Indonesia, is one of the largest operations in the industry, and the plastic resin business uses its global network for sales and procurement to handle volume of roughly 1 million tons per year. With strengths that include short lead time for supply to Asian regions and price competitiveness, the marine chemicals (industrial salt) business has a 20% share of the market for imports to Japan. Moreover, the petroleum resin business has established a solid presence in the U.S. market by building a value chain that stretches from production to sales.

Operating Environment and Value Creation Strategy

Targeting early achievement of profit for the year of ¥10 billion by addressing changes in the operating environment

Factors such as the U.S. “shale revolution” and global turmoil will likely bring about big changes to worldwide industrial production and distribution structures, and to the map of major supply and demand regions. In this environment, the Chemicals Division aims to create value by identifying market changes as quickly as possible and investing aggressively in businesses while working to expanding global trade.

On the back of our efforts to date to establish a stable earnings foundation, we achieved strong growth in revenues for the year ended March 31, 2016, despite severe market adjustments. Although we had a certain degree of success and strengthened our operations, we must further leverage our growth potential. We want to achieve profit for the year of ¥10 billion as soon as possible, and then set our sights on establishing a global presence.

Regionally, instead of focusing only on Japan and Asia as we have so far, we will work to capture growing demand in regions with a high concentration of automotive industry participants, such as India and Mexico, as well as to expand in China and North America.

Enhancing business clusters through aggressive investment that expands trading

The key phrase describing our strategy in this area is “business clusters.” The Chemicals Division has five strong business clusters that embody Sojitz’s unique strengths and identity: the methanol business, petroleum resin business, plastic resin business, marine chemicals business and rare resource business. We are poised to enhance our value chains by coordinating investment that will expand these business clusters and bolster their revenue-generating potential.

All of our business investments so far are proceeding smoothly and showing results. In the marine chemicals business that we entered in India, investment to expand has been successful and industrial salt handling volume has risen steadily to 3.5 million tons per year. We have also started production and sales of bromine and sulfate of potash, despite some issues on the production side. In the barite production and sales business in Mexico, we have established a framework to produce 100,000 tons per year, and production is steadily growing. Although the fall of crude oil prices has impacted barite demand, we plan to reinforce our sales strategy by taking advantage of our proximity to the United States, a region of barite demand.

As a new initiative in the methanol business, we signed an initial agreement in October 2015 with a state-owned oil company in Papua New Guinea to establish a joint venture that will develop a methanol manufacturing business, utilizing natural gas harvested in the country. We aim to reach a final decision on this investment by 2017. In the plastic resin business, we are pursuing measures in regions of growing demand. For instance, we established a new branch in Mexico, where we expect to see expansion, and have dispatched personnel from Japan to assist operations. In Wuhan, China, we set up a second joint venture plant for plastic components for automobiles to boost production capacity by 50%. In the petroleum resin business, we are studying prospects for business investments to strengthen our value chain in North America. As a strategic move for the future, we have also set our sights on the medical sector in Asia.

Endeavoring to Boost Corporate Value

Leveraging our human resources to broaden value chains and create value

In order for the Chemicals Division to build experience in trading that effectively addresses changes in the operating environment and promote value creation, it needs to fully understand client companies’ growth strategies and initiate joint projects with business partners. A distinctive feature of the chemicals industry is that connections forged among regions and among companies from a market perspective give rise to new products and markets. As such, we view human resource capabilities as the key to growth, and place particular emphasis on employee training. We are developing a full array of measures in this area, including a training program for managerial candidates that involves exchange with other industries, a curriculum for making investment and loan proposals to division COOs, and a basic training program for young employees covering business management and accounting principles. We are focusing on training nearly 400 local staff overseas who are responsible for maintaining relations with client companies and business partners around the world. These efforts are translating into concrete results, such as the creation of new businesses.

In the Chemicals Division, each employee will continually take on new challenges by demonstrating leadership to achieve growth for client companies. Our businesses will expand and mature as a result. Underpinned by these efforts, we aim to increase corporate value for the Sojitz Group.

Opportunities

▶  Rising global demand for chemicals driven by structural changes in industry and economic growth in emerging countries
▶  Increasing trade volume of synthetic agrochemicals and nonedible resources used for increasing yields and improving efficiency to address growing social and environmental issues in each country

Risks

▶  Possible decrease in competitiveness or trade volume of some products due to tighter safety and environmental regulations in certain countries
▶  Sluggish growth in trading of various chemicals due to a prolonged slump in the shale gas industry

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