Lotte Chemical Plans To Shut Down Cracker Facility In South Korea!

According to multiple local Korean media reports cited by Zhuangsu Vision on November 25th, Lotte Chemical Corporation will permanently shut down its 1.1 million tons/year naphtha cracking facility located in Daesan, South Korea. However, the report did not specify the exact closure date.

This decision was made following the restructuring agreement announced in June between Lotte and HD Hyundai Chemical. HD Hyundai Chemical also operates a naphtha cracking unit in the same area, with an ethylene production capacity of 850,000 tons per year. The two companies had previously agreed to integrate and optimize their production facilities in the park.

The report states that this move is seen as a response to the oversupply of olefins and derivatives in the region and globally caused by China's large-scale capacity expansion.

In addition, the South Korean government has promoted an industry restructuring plan agreed upon by major domestic producers, with the closure of the Daesan cracking unit expected to accelerate the restructuring process of other major petrochemical hubs such as Yeosu and Ulsan. The plan aims to reduce ethylene production capacity by a total of 2.7 million to 3.7 million tons per year. After the integration of upstream olefin businesses is completed, the restructuring of downstream businesses is expected to be advanced, focusing on reducing polyethylene and polypropylene production capacity.

Reports indicate that Lotte and HD Hyundai Chemical are exploring options to adjust their downstream production plans rather than closing the plants.

In Ulsan, Korea Petrochemical Industry, SK Geocentric under SK Innovation, and S-OIL Corporation have agreed to hire an external consulting firm to assess restructuring plans.

In Lishui, LG Chem had proposed to sell its naphtha cracking plant to GS Caltex and establish a joint venture, but there has been no further progress yet. The report also noted that discussions regarding the possible business integration between Lotte and Yeochun NCC in Lishui are also expected to commence.

According to data from S&P Global Energy, South Korea's total ethylene production capacity is 13 million tons per year.