Korea Approves First Petrochemical Restructuring Project Amid Downturn
The Korean government has approved the first petrochemical industry restructuring project, involving Lotte Chemical and HD Hyundai Chemical at the Daesan complex. Lotte Chemical will spin off its naphtha cracking center, which will then merge with HD Hyundai Chemical. The Korea Chemical Industry Association (KCIA) welcomed the move, citing a prolonged downturn and global ethylene oversupply. The industry seeks further government support as more restructuring proposals are anticipated for other complexes, aiming to streamline facilities and reduce output.
The Korean government has officially sanctioned the nation's inaugural petrochemical industry restructuring initiative, a move warmly received by industry stakeholders grappling with a sustained economic downturn. The approved plan focuses on the Daesan Petrochemical Industrial Complex in Seosan, South Chungcheong Province, and involves a strategic reorganization between Lotte Chemical and HD Hyundai Chemical. Under this groundbreaking arrangement, Lotte Chemical will divest its naphtha cracking center (NCC) operations in Daesan, creating a new independent entity. This newly formed company will subsequently merge with HD Hyundai Chemical, marking a significant step towards consolidating and optimizing operations within the sector.The Korea Chemical Industry Association (KCIA) expressed its profound appreciation for the government's swift approval, emphasizing the active cooperation from various ministries and agencies. This restructuring is deemed crucial given the global oversupply of ethylene, a fundamental feedstock for plastics and industrial chemicals vital to the construction, automotive, and other sectors. A KCIA official highlighted the urgent need for petrochemical firms to curtail output through facility integration and streamlining to combat the current structural crisis. Following this approval for the Daesan complex, expectations are high for the government to review and greenlight additional restructuring proposals targeting companies operating in the Yeosu complex in South Jeolla Province and the Ulsan complex. The association has also called upon the government to provide continuous policy support, including essential financial assistance and regulatory relief, to help the industry navigate and overcome its profound challenges. This collective effort underscores a concerted drive to bolster the competitiveness and sustainability of Korea's petrochemical sector in a challenging global market.
