Mitsubishi Chemical Halts MMA Plant Expansion

On January 7, 2025, Mitsubishi Chemical announced that it would halt its plans to build a new MMA (Methyl Methacrylate) monomer plant in Geismar, Louisiana, USA.

Reasons for Halting the Investment Plan

Mitsubishi Chemical had been working on the front-end engineering design and obtaining the necessary permits and approvals for the project. The decision to terminate the investment was made for the following reasons: existing MMA monomer production facilities in Tennessee, USA, and other locations can meet current demand; furthermore, the capital investment required for the project increased due to inflation and other factors. Additionally, negotiations with customers failed to secure long-term commitments for the project.

Project Delays

As previously reported by the media, the project was initially expected to cost over ¥100 billion (approximately ¥5 billion RMB) and was set to start production in fiscal year 2025, with an annual capacity of 350,000 tons of MMA monomer, which would account for around 10% of global demand, making it the largest MMA monomer plant in the world.

Mitsubishi Chemical had announced on December 9, 2020, that it would purchase land and conduct feasibility studies for the new MMA plant in Geismar, Louisiana. The plant would have used Mitsubishi's proprietary "New Ethylene Process (Alpha Process)" technology, utilizing ethylene derived from US shale gas as a raw material.

On October 3, 2022, Mitsubishi Chemical announced that the final investment decision for the project, originally scheduled for mid-2022, would be delayed by 6 to 18 months due to market uncertainties.

In a February 6, 2024, report from ICIS, it was noted that although the final investment decision had not yet been made, the project had reached several regulatory milestones. A public hearing for the project was scheduled for February 1, 2024, by the Louisiana Department of Environmental Quality. Earlier in 2023, regulators had made a preliminary decision to approve the construction of the plant.

The announcement also indicated that Mitsubishi Chemical had recorded a ¥20 billion (approximately ¥930 million RMB) impairment loss due to expenses incurred for the investment so far.

Mitsubishi Chemical stated that it would continue to optimize its global production system by establishing new business locations and integrating existing ones to enhance the competitiveness of its MMA business. The company will pursue growth strategies focused on high-value-added applications and the development of new applications, as outlined in the "2029 New Mid-Term Management Plan" announced on November 13, 2024.

Restructuring and Shutdown of MMA Businesses by Other Companies

In early 2024, Mitsubishi Chemical announced a restructuring and transformation plan, which included renaming its "Polymers and Compounds/MMA" division to "MMA and Derivatives" starting from April 1, 2024. Some of the former Polymer and Compounds business would be moved to the "Specialty Materials" and "Basic Materials" divisions.

On February 27, 2024, Mitsubishi Chemical also announced the cessation of MMA production via the ACH process at its Hiroshima plant, along with the shutdown of some related production lines, and the withdrawal of some business activities. The Hiroshima plant had an MMA annual production capacity of 90,000 tons, but Mitsubishi Chemical would continue MMA production using the C4 process and continue to produce acrylonitrile and sodium glycine at its Okayama plant, as well as producing acrylamide at its Kanto plant.

On June 27, 2024, Japan's Kolon Industries announced it would cut its MMA annual production capacity by half, from 67,000 tons to 33,500 tons. It also decided to stop selling MMA externally and focus on internal use. Additionally, the company would reduce the production of downstream products and by-products, such as methyl methacrylate resin molding materials and ammonium sulfate, to adjust to market changes. This plan was scheduled to be implemented starting in July 2025.

On September 11, 2024, Japan’s Sumitomo Chemical announced it would close two of its three MMA monomer and polymethyl methacrylate (PMMA) production lines at its wholly owned subsidiary, Sumitomo Chemical Asia, in Singapore by the end of September 2024. After the reduction, the MMA monomer production capacity at this plant would drop by about 80%, while PMMA production would fall by approximately 70%.

MMA Supply and Demand Imbalance?

Mitsubishi Chemical's decision to terminate the expansion plan is based on the fact that existing MMA production capacities already meet market demand. Kolon Industries cited persistent oversupply as the reason for its reduction in capacity, while Sumitomo Chemical also pointed to deepening structural supply imbalances in the MMA industry.

Looking at domestic production capacity, from 2020 to 2024, domestic MMA production capacity continued to increase, reaching a total capacity of 2.67 million tons by 2024, a year-on-year growth of 10.33%. In 2024, new production capacity would add 200,000 tons per year (including Chongqing Yixiang's Phase II expansion of 150,000 tons of MMA and Yingke Chemical’s 50,000 tons C4-based MMA unit, which went online in July), accounting for around 7% of the total capacity for the year, with a growth rate of around 8%. Additionally, Panjin Sanli's 50,000 tons per year capacity was initially planned to come online by the end of 2024 but has yet to do so.

In terms of imports and exports, China’s MMA import volume continued to decrease. From 2020 to 2024, the export volume of MMA from China showed strong growth, with a five-year compound annual growth rate of 43.33%. In particular, exports in 2024 reached a five-year high, estimated at 300,000 tons, a record high.

From a downstream consumption perspective, over 60% of MMA’s downstream demand is concentrated in PMMA (acrylic), with other key downstream products including surface coatings and plastic processing additives.

However, PMMA faces strong competition from alternative materials in the resin market. In 2023, China’s apparent consumption of PMMA was 389,200 tons, down 15% from the previous year. The main reason for the decline in demand is the intense competition between standard-grade PMMA products and alternative materials like PS (polystyrene) and PC (polycarbonate).

Looking forward, the MMA-PMMA industry chain is targeting high-end markets. For example, Sumitomo Chemical has stated that it will focus on specialty/high-value-added PMMA products and will use its technological advantages to transform its business structure into a more flexible one. Sumitomo also aims to create sustainable value in line with current environmental trends through recycling technologies. In December 2022, Sumitomo completed a pilot facility for chemical recycling of PMMA at its Ehime plant in Japan.

Additionally, Zhuhai Xintao Optical Materials Co., Ltd. plans to invest ¥700 million to build an optical-grade PMMA particle project. According to local environmental agency announcements, the project will build two production lines for optical-grade PMMA particles, with an expected output of 120,000 tons per year.