February 1, 2013
Sumitomo Chemical to Restructure Petrochemical Business at Chiba Works

Sumitomo Chemical has decided that it will close down an ethylene plant at its Chiba
Works located in Ichihara, Chiba, Japan, in or before September 2015 when the next
periodic shutdown maintenance will take place, to reinforce the competitiveness of its
petrochemical operation at the Chiba Works, the Company’s stronghold for
petrochemical business in Japan.
After the closure of the ethylene plant, Sumitomo Chemical will procure necessary
quantities of ethylene and other basic petrochemical feedstock by increasing purchasesfrom Keiyo Ethylene Co. (Keiyo Ethylene), a joint venture among Maruzen
Petrochemical Co. (Maruzen Petrochemical), Mitsui Chemicals Inc. (Mitsui Chemicals)and Sumitomo Chemical.
In recent years, Japan's petrochemical industry has constantly been faced with thedifficult business environment due mainly to a decline in domestic demand and anincrease in imports. This basic trend is expected not to change much in the years ahead.
Given the situation, Sumitomo Chemical believes that its domestic petrochemicalbusiness can only be enhanced and stay sustainable by further curtailing costs andaugmenting lines of higher value-added products.
Sumitomo Chemical’s ethylene plant has been in operation for longer than 40 years now,and its competitiveness is falling behind in terms of energy efficiency, and maintenanceand repair costs to be incurred. In addition, a decrease in domestic demand is growing
conspicuous for some of general-purpose ethylene derivatives over the past years. Inlight of the aging of its ethylene plant and the structural changes taking place indomestic demand, Sumitomo Chemical has been examining various possible measuresand opportunities to optimize the operation of its Chiba Works. As a result, as far as
ethylene and other basic petrochemical feedstock are concerned, the Company has
determined it most prudent to cease producing them by itself by the time of the next
periodic shutdown maintenance of the Chiba Works and thereafter procure all of its
requirements of ethylene and other basic petrochemical feedstock from Keiyo Ethylene,
which operates the newest and largest production facilities in Japan. With respect tosuch increased supply of ethylene and other basic petrochemical feedstock from KeiyoEthylene, Sumitomo Chemical has agreed in principle with Maruzen Petrochemical andMitsui Chemicals that Sumitomo Chemical’s allocation of the supply will be raised toaccommodate its requirements..
The closure of the ethylene plant will enable Sumitomo Chemical to procure ethylene
and other basic petrochemical feedstock more efficiently while at the same time
reducing fixed costs by streamlining related ancillary facilities.
Going forward, Sumitomo Chemical will continue to look into ways to optimize
production facilities at the Chiba Works for some of the ethylene derivatives, includingpossibilities of plant closure. In a broader perspective, the Company will work tostrengthen its entire global petrochemical business, including operations at production
bases in Saudi Arabia and Singapore, along with the ongoing restructuring of the Chiba
Works.
A possible impact of the ethylene plant closure on the Company’s financial performance
will be announced as soon as it becomes available.
(Outline of the ethylene plant at Sumitomo Chemical’s Chiba Works)
Operation Start-up: January 1970
Ethylene production capacity: 415,000 tons a year (a year with no periodic shutdownmaintenance)(Outline of Keiyo Ethylene)
Name: Keiyo Ethylene Co., Ltd.
Paid-in Capital: 6 billion yen
Shareholdings: Maruzen Petrochemical 55%, Mitsui Chemicals 22.5%, Sumitomo
Chemical 22.5%
Incorporation: September 1991
Operation Start-up: December 1994
Ethylene production capacity: 768,000 tons a year (a year with no periodic shutdownmaintenance)