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Photo courtesy of Lotte Chemical |
[Alpha Biz= Kim Jisun] SEOUL, October 26, 2025 — South Korea’s Ministry of Trade, Industry and Energy (MOTIE) is expected to unveil a restructuring plan for the Daesan Petrochemical Complex in early December, as the nation’s petrochemical sector grapples with a global supply glut and falling margins.
According to a ministry official, the Daesan restructuring proposal is the most advanced among the country’s major petrochemical clusters. “The plan for the Daesan complex is progressing rapidly,” the official said. “If the current pace continues, a finalized restructuring roadmap could be released by December.”
Industry sources report that Lotte Chemical and HD Hyundai Chemical have reached an agreement to consolidate their operations at the Daesan Industrial Complex. Under the proposed plan, Lotte Chemical will transfer its naphtha cracking center (NCC) and related facilities to HD Hyundai Chemical through a non-cash asset contribution. In return, HD Hyundai Chemical will make a cash investment to form a new joint venture, with both companies expected to hold similar equity stakes.
The two firms are preparing to submit their final agreement to MOTIE for approval, marking what could become the first voluntary industry-led restructuring case in Korea’s petrochemical sector.
In coordination with relevant ministries, the government is considering various support measures, including temporary exemptions from antitrust restrictions and revisions to the Corporate Vitalization Act, to facilitate the restructuring process.
Beyond Daesan, other petrochemical hubs — including Ulsan and Yeosu — are also exploring structural reforms. In Ulsan, SK Geocentric, Daehan Chemical, and S-Oil are working with external consultants to draft a restructuring strategy, though progress has been slow. In Yeosu, LG Chem has reportedly proposed a joint-venture model to GS Caltex, but discussions remain at an early stage.
In August, the government and ten major petrochemical firms signed a cooperation agreement to reduce domestic naphtha cracking capacity by up to 3.7 million tons by year-end. South Korea currently has an NCC capacity of 12.8 million tons, far exceeding domestic demand of 8.6 million tons, underscoring the urgency of capacity reduction and facility consolidation.
알파경제 Kim Jisun (stockmk2020@alphabiz.co.kr)
