Sumitomo Chemical Co. and Mitsui Chemicals Inc. said Monday they have agreed to scrap plans to integrate their operations under a holding company.

The chemical firms were scheduled to launch Sumitomo Mitsui Chemical Co. in October. The joint company would have been tasked with overseeing the management of Sumitomo Chemical, Mitsui Chemicals and their group companies.

The firms' failure to agree on a merger ratio reportedly led to abandoning the plan.

The companies will continue to explore strategic alliances in individual sectors, and a joint polyolefin company launched last April will remain intact, they said.

In light of oversupply in the global petrochemical market, both Sumitomo and Mitsui will now need to review their business strategies, industry analysts said.

Sources at the two firms partly attributed the decision to scrap the merger plan to a delay in system integration preparations.

But industry analysts believe the decision may be tied to a leadership struggle.

The firms said the integration would be conducted on an equal footing. It became apparent, however, that Sumitomo was taking the initiative, provoking disaffection at Mitsui, the analysts said.