Lotte Chemical and HD Hyundai Chemical’s businesses are being restructured! It involves an ethylene production capacity of 1.95 million tons per year!

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South Korea’s two major petrochemical companies, Lotte Chemical and HD Hyundai Chemical, issued a joint statement on the 26th, announcing that they have submitted an application to the South Korean government to review and approve a plan for merging their petrochemical businesses. This is the first concrete restructuring plan put forward by the industry since 10 South Korean petrochemical companies signed agreements 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 its industrial structure, they have formally submitted an application to South Korea’s Ministry of Trade, Industry and Energy requesting approval for their plan to integrate their naphtha cracking facilities (NCC). The core of this restructuring plan is to address the long-standing structural overcapacity issue of NCC in China’s petrochemical industry. Lotte Chemical separated its naphtha cracking plant operations located in the Dae산 Industrial Park and merged them into HD Hyundai Chemical, thereby establishing a unified operational system for the production of petrochemical products such as NCC. Upon completion of the merger, the production of petrochemical products in the Oyama Industrial Park will be integrated. The NCC is a key unit used to produce basic raw materials for the petrochemical industry, such as ethylene and propylene. According to South Korea’s Chosun Ilbo, the business restructuring involves an ethylene production capacity of 1.95 million tons per year; among this, Lotte Chemical’s Dae산 plant has an annual ethylene production capacity of 1.1 million tons, while HD Hyundai Chemical’s plant has an annual capacity of 850,000 tons. However, both companies stated that they will determine the specific scale of cuts and details such as the equipment involved only after the South Korean government approves the restructuring plan. In recent years, the South Korean petrochemical industry has faced a severe survival crisis as continuous capacity expansion has led to an oversupply and a sharp decline in profit margins. On August 20 this year, 10 major South Korean petrochemical companies signed an agreement regarding business restructuring, which includes a significant reduction in petrochemical production capacity, in an effort to overcome the crisis by cutting excess capacity and improving competitiveness fundamentally.