Korean Petrochemical Firms Finalize Sweeping Restructuring Plans
Korean petrochemical companies have finalized self-restructuring plans to address global oversupply, meeting a government deadline. These plans involve asset sales, joint ventures, and significant capacity cuts, aiming to reduce domestic ethylene production by 2.7 to 3.7 million tons annually. Key initiatives include Yeochun NCC and Lotte Chemical shutting down an ethylene unit, LG Chem and GS Caltex merging operations, and Lotte Chemical and HD Hyundai Chemical integrating facilities. These efforts are projected to meet the government's reduction target.
South Korea's petrochemical industry is undergoing a significant overhaul as leading firms have submitted comprehensive self-restructuring plans by a government deadline. This initiative is a direct response to a prolonged global oversupply of petrochemicals, with companies aiming to enhance competitiveness and secure future financial and policy support. The core objective is to reduce total domestic ethylene production by an ambitious 2.7 million to 3.7 million tons annually.The submitted plans outline intensive measures, including asset sales, the formation of joint ventures, and permanent shutdowns of outdated or underutilized facilities. In the Yeosu industrial complex, Yeochun NCC and Lotte Chemical have agreed to jointly shut down Yeochun NCC’s third ethylene unit (470,000 tons) and an additional naphtha cracking center (NCC). Concurrently, LG Chem and GS Caltex are proposing a merger of their Yeosu operations, planning to cease production at LG Chem’s 1.2-million-ton and 800,000-ton ethylene plants through a joint venture, ultimately shutting down the larger facility.Similar consolidation is advancing in Daesan, where Lotte Chemical and HD Hyundai Chemical previously submitted a plan to integrate their NCC facilities, involving the merger and shutdown of Lotte Chemical’s 1.1 million-ton NCC unit. In Ulsan, SK Geo Centric, Korea Petrochemical Ind. Co., and S-Oil have also finalized restructuring proposals, focusing initially on optimizing downstream operations before considering NCC capacity reductions. These collective efforts are projected to achieve at least a 3.67 million-ton reduction in ethylene output, effectively meeting the government's target. Industry Minister Kim Jung-kwan is scheduled to meet with company heads to discuss implementation and government support.
