South Korean Petrochemical Companies Submit Restructuring Plan, Government Urges Faster Implementation

The Ministry of Trade, Industry and Energy of South Korea announced that 16 major petrochemical companies operating in the country's three core production bases (Yeosu, Daesan, and Ulsan) have submitted their business restructuring plans before the government's deadline set for the end of December. This move is a key step in the implementation of the "Petrochemical Industry Revitalization Direction" roadmap announced by the government in August, paving the way for a significant reduction in ethylene production capacity in South Korea.

Minister of Trade, Industry and Energy Kim Jeong-gwan announced this news at a meeting aimed at gathering feedback from petrochemical companies and promoting the rapid implementation of restructuring proposals. "All companies have submitted their business restructuring plans within the deadlines set in the government roadmap. If these plans are effectively executed, it is expected that the industry will achieve its self-imposed goal of reducing ethylene production capacity by 2.7 to 3.7 million tons," Kim Jeong-gwan stated.

He urged companies to accelerate the restructuring process next year: "Starting next year, we must advance structural reforms and achieve substantial results." He added that companies should quickly formulate a final business restructuring plan based on the restructuring proposals submitted this time.

The government will review and approve the relevant plans through the Business Restructuring Plan Review Committee. Once the plan is approved, the authorities will introduce comprehensive support policies covering areas such as finance, taxation, research and development, and regulatory exemptions to facilitate the implementation of the restructuring.

To further support industrial transformation, the government will launch the "Chemical Industry Innovation Alliance" on December 23. This collaboration platform will integrate leading enterprises, small and medium-sized chemical companies, universities, and research institutions to conduct research and development and infrastructure support related to core materials needed for key industrial upgrades and environmental transformation, with priority given to meeting the R&D needs of enterprises undergoing restructuring.

Kim Jeong-gwan also acknowledged that local small and medium-sized enterprises (SMEs) and the employment sector may face potential challenges, and promised to formulate a comprehensive support plan for the chemical industry ecosystem in the first half of next year, including measures to relieve SMEs and provide employment support.

The companies that have taken the lead in finalizing the restructuring plan include Lotte Chemical and HD Hyundai Chemical. According to their plans, the first step will be to split Lotte Chemical's naphtha cracking facility located in the Daesan base, which has an annual production capacity of 1.1 million tons, and then merge its operations with HD Hyundai Chemical's ethylene cracking facility at the same base, which has an annual production capacity of 850,000 tons.

In early December, DL Chemical announced that its debt-ridden subsidiary Yeochun NCC's No. 1 cracking facility in Yeosu, with an annual capacity of 900,000 tons of ethylene, could face closure.