Alphabiz - LG Chem Considers Stake Sale in BPA Business as Part of Petrochemical Restructuring

Photo courtesy of Yonhap News

[Alpha Biz= Kim Jisun] LG Chem is reviewing a potential restructuring of its bisphenol A (BPA) business, including a partial stake sale, as it seeks to navigate prolonged weakness in the petrochemical sector.

According to industry sources on April 8, LG Chem conducted due diligence at its Daesan plant in collaboration with Kukdo Chemical and Samil PwC to explore strategic cooperation options for its BPA division. While discussions over a potential deal have continued for years, this marks the first formal due diligence process.

LG Chem is reportedly considering multiple restructuring scenarios, including selling a portion of its BPA business to Kukdo Chemical and establishing a joint venture. Kukdo Chemical, a major downstream user of BPA, could benefit from securing stable raw material supply, while LG Chem aims to reduce business risks through closer collaboration with a key customer.

BPA is a core feedstock used in engineering plastics such as polycarbonate and epoxy resins, with applications spanning home appliances, automotive components, coatings, and adhesives. LG Chem operates BPA production facilities in Daesan and Yeosu, with an annual capacity of approximately 165,000 tons at its Daesan plant alone, holding a domestic market share of around 42.5%.

However, profitability in the commodity petrochemical sector has deteriorated amid oversupply and increasing competition from Chinese producers. Global BPA prices declined from KRW 1.757 million per ton in 2024 to KRW 1.646 million last year, a drop of about 6.3%.

The potential divestment aligns with LG Chem’s broader restructuring efforts to streamline its portfolio by exiting non-core and low-margin businesses. The company has recently divested or liquidated several subsidiaries and joint ventures as part of this strategy.

Operationally, LG Chem has also adjusted production, including temporarily halting operations at its Yeosu No. 2 plant due to disruptions in naphtha supply caused by geopolitical tensions in the Middle East.

Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)