This article was published on June 13, 2025, at 4:31 p.m. on the ChosunBiz MoneyMove site.
LOTTE Chemical and HD Hyundai Group have decided to integrate the naphtha cracking facility (NCC) within the Daesan petrochemical complex in Seosan, South Chungcheong Province. Both sides are currently negotiating the asset values of their respective plants, and there are concerns that if they cannot narrow their differences, the restructuring of the domestic petrochemical industry could stall before it even begins.
According to the investment banking (IB) industry on the 13th, LOTTE Chemical and HD Hyundai are discussing plans to integrate the NCC facility currently in operation at the Daesan petrochemical complex. While these corporations have stated that nothing has been finalized yet, industry insiders explain that some consensus has been reached regarding the structure of the merger.
It is reported that the plan involves transferring the facilities held by LOTTE Chemical to HD Hyundai Chemical, with HD Hyundai Group providing additional investment to operate the business as a single entity. HD Hyundai Chemical is a joint venture in which HD Hyundai Oilbank and LOTTE Chemical hold 60% and 40% equity, respectively.
Currently, these companies are working with major domestic accounting firms to evaluate the assets held on both sides and the corporate value of the joint venture. The agreed asset value will be critical for the success of the integration, according to industry observations. An IB industry insider noted, “It is still in the early stages,” adding, “There has been consensus on the structure, but I understand that both sides are still negotiating the valuation.”
The domestic petrochemical industry is facing a crisis due to oversupply from China. As the recession continues, there have been several attempts at restructuring. However, disagreements over which plants to close and how much value to assign to the plants have prevented significant results.
In the case of LG CHEM, it was reported that negotiations to sell its NCC facility to Middle Eastern capital encountered difficulties and have recently been suspended. LG CHEM has been negotiating since last year to sell the Yeosu NCC Plant No. 2 to PIC, a subsidiary of the Kuwait Petroleum Corporation.
Some industry observers speculate that if the integration of LOTTE Chemical and HD Hyundai's facilities is successful, it could serve as a catalyst for a full-scale restructuring of the domestic petrochemical industry. However, industry insiders believe there is still a long way to go. They note that government-level support measures are necessary for a swift restructuring of the entire industry, but there has been no visible progress yet.
The government announced a 'plan to enhance the competitiveness of the petrochemical industry' at the end of last year, but the establishment of policies has been delayed due to the impeachment of the president and early elections. Support measures that were originally expected to be released by the Ministry of Trade, Industry and Energy in the first half of this year have not shown any signs of being issued.
Another industry insider stated, “Government-level discussions are still in the early stages,” and added, “Corporations can only take action after concrete measures are provided, such as capital increases from the Korea Development Bank or the Export-Import Bank, but it is still a situation where such expectations cannot be held.”
Meanwhile, the Korea Chemical Industry Association, which has major petrochemical companies as members, delivered the results of a consulting service from the Boston Consulting Group (BCG) to the Ministry of Trade, Industry and Energy in March. In the report, BCG recommended a swift restructuring, stating, “There is a high likelihood that the economic downturn in the Northeast Asian petrochemical market will continue until 2030.” Major domestic petrochemical complexes include Yeosu, Ulsan, and Daesan. In Yeosu, there are LOTTE Chemical, LG CHEM, Yeocheon NCS, GS Caltex, and in Ulsan, there are Korea Petrochemical Ind. and SK Geo Centric.