Company history

Sumitomo Chemical did not begin as a chemical venture. It began as a pollution problem. The Sumitomo house had grown up around the Besshi copper mine in Ehime, and the sulphur dioxide from its smelter was damaging the farmland around it. Captured, that gas becomes sulphuric acid; sulphuric acid makes fertilizer. In September 1913 the Sumitomo head office built a fertilizer works at Niihama, began test runs the following year, and shipped its first superphosphate of lime in October 1915. In June 1925 the operation was incorporated as Sumitomo Fertilizer Manufacturing with capital of ¥3 million. Where the rest of Japan’s chemical industry was built on imported patents and imported feedstock, this company started from a by-product of its own mine — the abatement of a nuisance and the founding of a business, done as one act.

Fertilizer alone had a ceiling, and the answer was found upstream in the same way: ammonia, which Japan barely made for itself. The company licensed the ammonia-synthesis process from the Nitrogen Engineering Corporation of the United States in 1928 and started production at Niihama in April 1931, which gave it a platform reaching out to ammonium sulphate, nitric acid and industrial chemicals generally. In February 1934 it renamed itself Sumitomo Chemical Industries; capital had risen from ¥3 million to ¥20 million. The word “fertilizer” disappeared from the sign, and with it the shape of a single-product company. The habit that would define the firm — take the feedstock you hold and push it one stage downstream — was established here.

Wartime consolidation widened it further. In July 1944 the company absorbed Nippon Senryo Seizo, taking it into dyestuffs and pharmaceuticals; a month earlier the Sumitomo head office had placed Sumitomo Aluminium Smelting under its management, adding integrated alumina-to-aluminium production; a dye maker followed in 1945. In little more than a decade a fertilizer works had become a diversified chemical company standing on sulphuric acid, ammonia, dyes, medicines and light metals. Built under war control, the assets varied wildly in quality — but the depth of chemical engineers and operating plants they left behind is what made the postwar move into petrochemicals possible.

The occupation’s dissolution of the zaibatsu forced the company to shed its own identity: in February 1946 it renamed itself Nisshin Chemical Industries to dilute the Sumitomo colour and stay outside the holding-company purge. It listed on the Tokyo and Osaka exchanges in May 1949, and that December took over the entire plant of the former Sumitomo Aluminium Smelting, closing the alumina-to-aluminium chain inside the company. In August 1952, once the San Francisco peace treaty took effect, it took the name Sumitomo Chemical Industries back. Through those six years it had to erase the zaibatsu marking while keeping the business itself intact — and because it did not shrink, it still had the strength to industrialize polyethylene in 1958.

What it rebuilt was a four-legged company: fertilizer, dyes, pharmaceuticals and aluminium. Niihama restarted ammonia and ammonium sulphate in October 1945, aluminium in 1948, caustic soda in 1951 — which opened the way to PVC — and finished a large urea plant in 1955. The Osaka works resumed dyes and medicines, launching the tuberculosis drug PAS and antihistamine cold remedies in 1950, while Nishijima made the pyrethroid household insecticide Pynamin. In agrochemicals the company licensed parathion in 1953 and malathion in 1954 from American Cyanamid — the foundations of what would become one of its most profitable businesses.

Then came the decisive step. In May 1958 the Ehime works started up ethylene and low-density polyethylene using ICI’s high-pressure process — the first such plant in Japan, and the earliest entry into petrochemicals by a Japanese chemical maker. Polypropylene technology followed from Montecatini of Italy in 1962, and in November 1965 the company founded Sumitomo Chiba Chemical to build a complex at Ichihara (merged in 1975; today’s Chiba works). Two ethylene sites and the two basic commodity resins: the substitution of oil for coal as feedstock was, seen from inside, the same downstream extension the company had been making since 1913.

In January 1970 Chiba completed a 300,000-tonne-a-year ethylene plant and its derivative complex, making Sumitomo Chemical a petrochemical producer in the full sense. At the same time the low-toxicity organophosphate Sumithion (made at Oita from 1969) and the pyrethroid household insecticides Pynamin and Neo-Pynamin were spreading through world markets. Heavy chemistry to balance the feedstock chain and light, high-margin chemistry to earn on it — the two-track structure that later became the model for Japan’s diversified chemical companies took shape here, and the agrochemicals side was itself a payoff from the organic-chemistry skills accumulated since the 1931 ammonia plant.

The oil shocks then produced a contradiction the company has never entirely escaped. Power-hungry aluminium smelting became unviable at home: the business was spun out as Sumitomo Aluminium Smelting in July 1976, abandoned in 1981 and the vehicle dissolved in 1986. Yet in February 1982 Asahan Aluminium in Indonesia, a Japan–Indonesia economic-cooperation project, started up under Sumitomo Chemical’s lead. The same asymmetry hit petrochemicals: Ehime’s ethylene was shut in January 1983 and production concentrated at Chiba, while in March 1984 the Singapore petrochemical complex, a Japan–Singapore economic-cooperation project of 300,000 tonnes a year, came on stream. Shrink at home, build abroad — decisions driven less by returns than by the obligation to execute an intergovernmental agreement. The company that had been handed the job of postwar heavy-chemical industrialization was now permanently caught between commercial logic and national policy, and that is the line that runs directly to Rabigh.

Against that, the domestic portfolio was deliberately rebuilt around high value. In February 1984 pharmaceuticals were placed in Sumitomo Pharmaceuticals, a joint venture with Inabata, and transferred out that October — R&D at global-pharma scale could not be carried as one division of a chemical company. Crop protection was bulked up by acquisition: Abbott’s biological-pesticide business in 2000 (Valent BioSciences) and Aventis’s household insecticides in 2001, which locked in a world share in pyrethroids. An IT-related Chemicals sector was created in October 2001, and in March 2003 Dongwoo STI in Korea began volume production of LCD colour filters. In October 2004 the company shortened its name to Sumitomo Chemical and moved its head office to Tokyo; in October 2005 Sumitomo Pharmaceuticals and Dainippon Pharmaceutical merged. Pharmaceuticals, agrochemicals and electronic materials — three specialist axes, all kept inside the group, to offset the cyclicality of commodity chemicals.

Hirose Hiroshi became president in June 2008 and was hit almost immediately by the Lehman shock. In the year to March 2009 revenue was ¥1.79 trillion, operating profit almost nothing at $22.5M (¥2bn), and the group posted a net loss of $631.9M (¥59bn) — its first consolidated net loss. Three high-value axes or not, if the petrochemical core sank the consolidated result sank with it: a chemical company is squeezed on margin and volume at the same time when crude and downstream demand move together.

In the same wounded year two enormous bets began to run. In April 2009 the ethane cracker at Petro Rabigh, built jointly with Saudi Aramco, started up — the culmination of the state-backed overseas model that had begun with Singapore. That October Dainippon Sumitomo Pharma bought Sepracor of the United States, acquiring the North American platform for Latuda, the antipsychotic that would become its largest product. Both were multi-hundred-billion-yen commitments whose verdicts would take more than a decade to arrive; both came due, together, in the same year.

Under Tokura Masakazu, president from June 2010, the three axes finally showed up in the numbers — Latuda growing in the US, Dongwoo Fine-Chem supplying polarising film to Chinese and Korean display makers, agrochemicals expanding in South America (a further four Nufarm units bought there in April 2020). Operating profit reached a record $2.3B (¥251bn) in the year to March 2018, and the year to March 2022 brought revenue of ¥2.77 trillion and net profit of $1.2B (¥162bn). Beneath that, however, Rabigh’s refining margins were chronically weak and Latuda’s 2023 patent expiry was approaching, while the December 2019 Roivant alliance and the acquisitions had loaded the balance sheet with goodwill. In the year to March 2023, under Iwata Keiichi, the group recorded an operating loss of $220.6M (¥31bn) — its first since adopting IFRS. The premise of the portfolio strategy was that the three axes were independent of one another. They were not.

The two bets of 2009 landed together. In the year to March 2024 Sumitomo Chemical reported an operating loss of $3.2B (¥489bn) and a net loss of $2.1B (¥312bn) — by far the largest in its history — with Rabigh and the post-Latuda collapse at Sumitomo Pharma as the twin epicentres. In November 2023 management declared a radical restructuring with no sanctuaries: it quit caprolactam after more than fifty years, worked with Maruzen Petrochemical to rationalize Keiyo Ethylene, and sold policy shareholdings and non-core businesses to raise cash. A company built by pushing its feedstock chain downstream was now dismantling the commodity chemistry it had started from.

The bleeding stopped fast. Under Mito Nobuaki, president from 2024, the year to March 2025 returned to profit — operating profit of $1.3B (¥193bn) and net profit of $257.3M (¥39bn) — and in October 2024 the group was rebuilt into four sectors: Agro & Life Solutions, ICT & Mobility Solutions, Advanced Medical Solutions, and Essential & Green Materials. Governance followed, with a shift to a company with an audit and supervisory committee in June 2025. But a fast recovery is not a cure: part of the profit came from asset sales, and neither commodity dependence in chemicals nor the difficulty of discovering new drugs is resolved in a single year. Where a chemical company that imports both its feedstock and its growth should place its earning axis is the question Sumitomo Chemical still carries.