Mitsubishi Chemical announces withdrawal from coke and carbon materials business
Mitsubishi Chemical Group Corporation announced that its Corporate Executive Officers Meeting resolved to withdraw from the coke and carbon materials (needle coke, pitch coke) business (the Product Group) within the coal business of the Company’s consolidated subsidiary Mitsubishi Chemical Corporation.
In connection with the withdrawal from this business, the Company anticipates a total non-recurring loss of approximately ¥85 billion ($549 MM) and expects to record a non-recurring loss of approximately ¥19 billion ($123 MM) in the third quarter financial results for the fiscal year ending March 2026. The remaining balance of approximately ¥66 billion ($426 MM) is to be recorded as an estimate in the financial results for the fourth quarter of the fiscal year ending March 2026.
Background and circumstances of business withdrawal. The company has been pursuing business portfolio reform based on its KAITEKI Vision 35 and Medium-Term Management Plan 2029 announced on November 13, 2024. As announced in the "Notice Regarding the Structural Reform of the Coal Business" dated August 1, 2024, the Company has sought to transform to a business structure less susceptible to market fluctuations as part of its reform efforts. This transformation involves optimizing the production structure of the coke business and revising sales policies in response to a challenging business environment characterized by a continued slump in the overseas coke market driven by the prolonged weakness in steel demand, particularly from China.
In structurally transforming its coal business, the Company has been steadily improving the profitability of its coke operations not only by reducing fixed costs through downsizing production scale, but also by reviewing its domestic and international sales portfolio and introducing a coking coal-linked price formula. Additionally, the Company has made thorough cost cuts alongside product price revisions in the carbon materials segment and pursued every possible measure to improve profitability with the continued operation of this Product Group as its premise.
However, the prolonged slump in the overseas coke market persists due to a global supply glut stemming from overproduction in China and the start-up of new large-scale facilities in Indonesia. With no prospect of resolving these structural issues despite the various measures taken to improve profitability and the quality advantage of the Company’s coke, the Company has determined that medium- to long-term growth would be difficult to achieve and it has therefore decided to cease coke production. Oversupply and sluggish demand continue to plague the carbon materials sector as well. Since the production system for carbon materials is based on the operation of coke ovens, halting coke production would directly impact the cost structure of carbon materials.
In view of these circumstances, the Company comprehensively reviewed the medium-to-long-term positioning of this Product Group within its overall business portfolio against the three criteria for business selection established by the Company -- consistency with its Vision, competitive advantage, and growth potential -- and has consequently decided on a business withdrawal from this Product Group
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