South Korea's Two Major Petrochemical Companies Apply for Business Integration

According to South Korean media reports, two major petrochemical companies in South Korea—Lotte Chemical and HD Hyundai Chemical—jointly announced on the 26th that they have submitted an application to the South Korean government for review and approval of their business integration plan. This is the first specific restructuring proposal from the industry since ten petrochemical companies, including these two, signed a business reorganization agreement in August this year.

According to Yonhap News Agency, the two companies stated that, in order to enhance the overall competitiveness of the petrochemical industry and optimize industrial layout, they have formally submitted an application to South Korea's Ministry of Trade, Industry and Energy requesting approval for their naphtha cracker complex (NCC) integration plan.

The core of this restructuring plan is to address the long-standing structural overcapacity in domestic NCC production capacity. Lotte Chemical will spin off its naphtha cracking plant operations located in the Daejeon Industrial Park and merge them into HD Hyundai Chemical, thereby establishing a unified operational system covering NCC and other petrochemical product manufacturing. After the merger, petrochemical production within the Daejeon Industrial Park will be integrated.

NCC is key equipment used to produce basic petrochemical raw materials such as ethylene and propylene. According to South Korea's JoongAng Ilbo, the ethylene production capacity involved in this restructuring amounts to 1.95 million tons per year, with Lotte Chemical’s Daejeon plant contributing 1.1 million tons annually and HD Hyundai Chemical contributing 850,000 tons annually.

However, both companies stated that the specific scale of capacity reduction and details regarding affected facilities will only be determined after receiving approval from the South Korean government.

On August 20 this year, ten major South Korean petrochemical companies signed an agreement on business restructuring, including significantly reducing petrochemical production capacity, aiming to overcome the crisis by cutting excess capacity and fundamentally enhancing competitiveness.