Company history

The company began in February 1887 as Tokyo Artificial Fertilizer, capitalised at ¥250,000. The chemist Takamine Jokichi had seen superphosphate being manufactured while studying in Britain; on his return he won the backing of Shibusawa Eiichi and Masuda Takashi, the two most consequential financiers of the age. Japanese farming at the time depended on imported fertilizer, and building a self-sufficient chemical industry was less a commercial opportunity than a national errand under Meiji industrial policy.

The errand did not pay quickly. Farmers had little grasp of chemical fertilizer, the business turned an operating profit only in its third year, and in May 1893 the plant burned down. Rebuilt and re-chartered under the new Commercial Code as a joint-stock company with Shibusawa as its first chairman, it then met the opposite problem: by the late Meiji and Taisho years fertilizer makers were springing up everywhere. Nissan Chemical’s answer was to consolidate the field rather than be consolidated by it — absorbing Teikoku Hiryo, Hokkaido Artificial Fertilizer, Osaka Ryuso, Chugoku Hiryo, Ryusan Hiryo and Hokuriku Artificial Fertilizer from 1908, and buying the fertilizer arm of Settsu Seiyu, to become the largest fertilizer maker in the country.

In 1923 it went further and drove the industry’s reorganisation itself, merging Tokyo Artificial Fertilizer with Kanto Sanso and Nihon Kagaku Hiryo. Scale then pulled it out of fertilizer alone: a Fauser-process ammonia synthesis plant at Toyama in 1928, new S-type electrolytic cells at the Oji works in 1936 and, with them, Japan’s first compound fertilizer. Sulphuric acid and superphosphate gave way to agricultural and industrial chemicals — the first of several times the company would redefine what it sold.

In April 1937 the company combined with Nihon Tan to move into coal-based chemistry as Nihon Kagaku Kogyo; that December, as the war economy tightened, it entered the Nissan zaibatsu and took the name Nissan Chemical Industries it still carries in essence today. Membership secured raw materials and capacity under wartime controls and fixed the shape of the business around basic chemicals and crop protection. Then the war took it apart: phosphate-rock imports stopped, fertilizer output faltered, and the company was absorbed into Nippon Mining as its chemicals division in 1943, then into Nippon Oil & Fats in 1945.

Reconstruction brought both rescue and severance. Chemical fertilizer was designated a priority industry and the plants were rushed back into service, but the deconcentration and corporate-reconstruction laws applied in full: the company listed on the Tokyo Stock Exchange in 1949, spun its oils-and-fats division out as NOF, and restarted as a private firm with capital of $186,806 (¥67m). The dissolution of the Nissan combine left it, uniquely among its peers, with no financial backer at all — a fact that shadowed every later decision and made it permanently more cautious about committing capital than the zaibatsu-descended chemical houses.

As postwar fertilizer output recovered, fertilizer margins collapsed, and every specialist maker suffered alike. Nissan Chemical set out to become a diversified chemical company: a 1952 technology tie-up with Italy’s Montecatini put Fauser urea plant into Toyama, and continuous superphosphate came on line at Oji. In 1963 it brought in Hidaka Akira from the Industrial Bank of Japan as president to force through rationalisation, including hiving off superphosphate; when Hidaka left the next year to rebuild Yamaichi Securities, another IBJ man, Ishii Ichiro, took over.

In 1965 the rationalised company set up Nissan Chemical Petroleum and entered petrochemicals — the royal road of the high-growth era. It was late. Mitsubishi Kasei, Mitsui and Sumitomo were already there with entrenched plant and distribution, and competing on the economics of scale was not realistically open to a latecomer. Nissan Chemical therefore narrowed to the technically harder products — PVC, polyethylene and higher alcohols — as its point of difference, opened a Saitama plant in 1969 and closed Oji, moving to Sodegaura.

The 1973 oil shock ended the argument. The industry sat on surplus capacity as feedstock costs jumped; sales weakened and prices fell. The company posted net losses in the years ended March 1982 and March 1983 — cumulative losses of $24M (¥6bn). In a structurally depressed industry where survival ran through scale, differentiation did not repair the numbers; smallness simply reappeared as a penalty in feedstock cost and in fixed costs spread over too little volume. With no zaibatsu behind it, the question was no longer how to improve petrochemicals but whether to be in it at all.

Taking the presidency in 1988, Nakai Takeo withdrew from all three petrochemical divisions — selling PVC to Tosoh, higher alcohols to Kyowa Hakko and polyethylene to Maruzen Petrochemical as going concerns. Trial transfers through joint ventures had begun as early as 1980; eight years of negotiation and internal preparation let the company complete the sales when the market turned in its favour. Abandoning the main business outright had almost no precedent in Japanese petrochemicals, still less doing so with the preparation and the price to show for it.

Nakai framed the exit as a change of business, not a retreat, and set out the post-exit scenario — high value added, built around crop protection — repeatedly inside the company; vice-president Tokushima spoke directly with some 1,000 employees about why it had to happen. The withdrawal went through without a revolt, which at the time was as unusual as the withdrawal itself: elsewhere in corporate Japan, cuts of that depth were costing managements their internal authority.

The following year a new five-year plan concentrated resources on three fields: agrochemicals, pharmaceuticals and performance materials. Proprietary discovery paid off — the herbicide Sirius in 1989, the acaricide Sunmite in 1991, Permit in 1994; in pharmaceuticals Landel in 1994 and the lipid-lowering drug Livalo in 2003. Performance materials began with alignment films for liquid-crystal panels in 1989 and semiconductor coating materials in 1998: small markets, but ones where a supplier written into the customer’s process is very hard to replace. By the year to March 1993 recurring profit reached a record $48.6M (¥5bn) — five years after the exit, the new structure was already visible in the accounts.

Crop protection went abroad on the same logic — not head-on against the global giants, but into the countries and crops where its own products fit. Subsidiaries followed in Korea (2001), Taiwan (2010), Shanghai (2014) and Suzhou (2017), selling the high-activity, low-dose, low-residue chemistry developed for Japan into Asian markets that were themselves shifting from cheap commodity pesticides to premium ones. Acquisition filled the gaps that in-house discovery could not fill fast enough: the herbicide business of Nihon Monsanto in 2002, a fungicide business from Dow AgroSciences in 2010, the quinoxyfen fungicide business from Corteva in 2019.

In 2018 the company dropped the word “Industries” to become simply Nissan Chemical Corporation — not a matter of sound but a restatement of what it is: no longer a basic-chemicals maker but a fine-chemicals company earning on three pillars. It stopped melamine production in 2022, tidying the last of the bulk residue, and in 2023 bought Nippon Phosphoric Acid to secure raw materials upstream of its founding fertilizer business. Meanwhile the process knowledge built on LCD alignment films moved into semiconductor front-end materials, with a new plant at its Korean subsidiary NCK and a 2022 investment in the US thermal-interface-materials firm Arieca under the Vista 2027 plan.

In the year to March 2024 sales of ¥226.7 billion produced an operating profit of $270.4M (¥38bn) — an operating margin near 17%, high for a Japanese chemical company. Thirty-six years after Nakai chose margins over scale, the choice reads directly off the income statement, and successive presidents have kept it as doctrine rather than restating it.