South Korea's Two Major Petrochemical Companies Apply For Business Restructuring, Involving Ethylene Production Capacity Of 1.95 Million Tons Per Year!

According to Korean media reports, South Korea's two major petrochemical companies, Lotte Chemical and HD Hyundai Chemical, jointly announced on the 26th that they have submitted an application to the South Korean government for approval to review the integration plan of their petrochemical businesses. This is the first specific restructuring plan presented by the industry since 10 Korean petrochemical companies signed an agreement for business restructuring in August this year.

According to Yonhap News, the two companies stated that in order to enhance the overall competitiveness of the petrochemical industry and optimize industrial layout, they have officially submitted an application to the South Korean Ministry of Trade, Industry and Energy, requesting approval for the integration plan of the two companies' naphtha cracking centers (NCC).

The core of this restructuring plan is to address the long-standing structural overcapacity issue of NCC in the domestic petrochemical industry. Lotte Chemical will divest its naphtha cracking plant located in the Dashan Industrial Park and merge it into HD Modern Chemical, thereby establishing a unified operating system that encompasses the production of petrochemical products including NCC. Once the merger is completed, the production of petrochemical products within the Dashan Industrial Park will achieve integration.

The NCC is a key facility for producing basic raw materials for the petrochemical industry, such as ethylene and propylene. According to the Korea JoongAng Daily, the business restructuring involves an ethylene production capacity of 1.95 million tons per year, including Lotte Chemical's Daesan plant with an annual ethylene production capacity of 1.1 million tons and HD Hyundai Chemical's ethylene production capacity of 850,000 tons per year.

However, both companies stated that they will determine the specific scale of reductions and the entities involved only after the South Korean government approves the restructuring plan. And details.

In recent years, due to the continuous addition of production capacity leading to an oversupply, profit margins have significantly declined, and the South Korean petrochemical industry is facing a severe survival crisis.

On August 20 this year, ten major petrochemical companies in South Korea signed an agreement regarding business restructuring, including a significant reduction in petrochemical capacity, hoping to overcome the crisis by cutting excess capacity and fundamentally enhancing competitiveness.