Mitsubishi Chemical and Asahi Kasei have agreed to set up a joint venture to operate their ethylene facilities at the same site from April 2011, the two chemical firms said on Monday.

The new 50-50 joint venture is aimed at integrating the two ethylene facilities in Mizushima, western Japan, to produce less by 2012 and consolidate the two into one if and when demand falls further, the two companies said in a joint statement.

Mitsubishi Chemical, Japan's top ethylene maker, operates two ethylene plants in Japan. One of them is in the same industrial complex in Mizushima as Asahi Kasei's naphtha cracker. The two have been looking at ways to integrate their ethylene business in the past few months as competitors in Asia add record naphtha cracking capacity this year and more competitive Middle East petrochemical plants, which use cheaper gas instead of naphtha as feedstock, increase production.

In Asia, most crackers use naphtha as the main feedstock to produce olefins such as ethylene, which are used to make plastics needed in manufacturing and construction. The agreement came after oil refiner Idemitsu Kosan and Mitsui Chemicals set up a 50-50 joint venture in April to operate their naphtha crackers in Chiba, near Tokyo, in a bid to reduce costs.