Mitsubishi Chemical Group Corporation, through its subsidiary Mitsubishi Chemical Corporation, has confirmed that it will exit its coke and carbon materials business. The decision covers key production lines at the Kagawa facility, including needle coke and pitch coke operations.
Market Pressure: Oversupply and Weak Steel Demand
The company pointed to ongoing structural challenges in the global coke market, driven by prolonged oversupply and weak demand from the steel sector. Mitsubishi Chemical emphasized that sluggish steel consumption, particularly in China, has contributed to a prolonged downturn in the overseas coke market.
In its assessment, the company noted that the pressure is not temporary, stating that the global market remains structurally burdened by “continued oversupply caused by excess production in China and new capacity coming online in Indonesia.”
Timeline Confirmed: Production to End in FY2027 H2
According to the announcement, coke production at the Kagawa plant is scheduled to end in the second half of fiscal year 2027. Following the shutdown of production, sales activities will also be gradually discontinued.
Financial Impact: ¥85 Billion Total, First Portion in March 2026
Mitsubishi Chemical expects the withdrawal to generate a one-off impact of approximately ¥85 billion (around $544 million). About ¥19 billion of this amount is expected to be recorded as an “extraordinary loss” in the third quarter of the fiscal year ending March 2026, while the remaining ¥66 billion is anticipated to be reflected in the fourth quarter results.
Operations Will Not Fully Shut Down
Not all production at the Kagawa site will be halted. Mitsubishi Chemical confirmed that the facility will continue producing strategic carbon-related products, including pitch-based carbon fiber and anode materials. The company also noted that approximately 600 employees are currently engaged in the affected business segment.
Part of Broader Portfolio Reform
The move is positioned as part of Mitsubishi Chemical Group’s ongoing portfolio transformation under its “KAITEKI Vision 35” and Medium-Term Management Plan 2029. Despite efforts such as cost reductions, pricing adjustments, and restructuring, the company stated that market conditions remain persistently challenging, accelerating its decision to withdraw from the coke business.
