Petrochemical Firms Rush Self-Rescue Plans Amid Government Deadline
Petrochemical companies are rushing to submit self-rescue plans by a government deadline to address global oversupply and secure financial support. Key firms in Yeosu and Daesan, including Yeochun NCC, Lotte Chemical, LG Chem, GS Caltex, and HD Hyundai Chemical, finalized agreements to cut ethylene production through mergers and plant shutdowns, nearing the government's target. However, negotiations in Ulsan involving SK Geo Centric remain inconclusive as burden-sharing details are still being worked out before a crucial ministerial meeting.
Petrochemical firms are urgently submitting self-rescue plans by a government-mandated Friday deadline, aiming to secure financial and policy support while tackling global oversupply. The Ministry of Trade, Industry and Energy pushed for these tight plans, agreeing with ten leading companies to cut annual domestic ethylene production by 2.7 to 3.7 million tons. Firms missing the deadline risk exclusion from future support. Significant progress was made in Yeosu and Daesan. In Yeosu, Yeochun NCC and Lotte Chemical agreed to shut down Yeochun NCC's third ethylene unit (470,000 tons/year) and another naphtha cracking center. Separately, LG Chem and GS Caltex proposed merging their Yeosu operations, including ceasing production at LG Chem’s 1.2-million-ton and 800,000-ton ethylene plants, eventually shutting the older 1.2-million-ton facility through a joint venture. In Daesan, Lotte Chemical and HD Hyundai Chemical previously agreed to integrate their NCC facilities, merging Lotte Chemical’s 1.1 million-ton NCC into HD Hyundai Chemical and shutting it down. These finalized plans in Yeosu and Daesan are expected to collectively reduce ethylene output by at least 3.67 million tons, aligning with the government's target. However, negotiations in Ulsan, involving SK Geo Centric, Korea Petrochemical Ind. Co., and S-Oil, remain inconclusive, with discussions focusing on optimizing downstream facilities and adjusting NCC capacity, potentially closing SK Geo Centric’s 660,000-ton NCC. Industry Minister Kim Jung-kwan will meet company heads to discuss support measures and the overall overhaul timetable.
