South Korea's trade, industry and resource ministry (Motir) has approved chemical producers Hyundai Chemical and Lotte Chemical Daesan's restructuring plans along with a support package on 25 February.
Hyundai Chemical and Lotte Chemical jointly applied to merge their plants in November 2025. Hyundai Chemical is a joint venture between Hyundai Oilbank and Lotte Chemical.
This is the first project approved under South Korea's government-led rationalisation efforts across the Daesan, Ulsan and Yeosu petrochemical complexes. These efforts were in response to the industry's prolonged losses since 2021, driven by rapid capacity expansions, particularly in China.
Under the approved plans, Lotte Chemical will merge its Daesan petrochemical plant with Hyundai Chemical, integrating the naphtha cracking centre (NCC) and downstream units. Parent companies Lotte Chemical and Hyundai Oilbank will invest 600bn Korean won ($420mn) each and will share equal ownership of the newly integrated corporation.
The restructuring is expected to take three years, during which Lotte Chemical will suspend its 1.1mn t/yr ethylene cracker in Daesan, and reduce operations of low-profit downstream facilities to curb oversupply in the Daesan petrochemical complex. The newly integrated corporation aims to focus on producing higher value-added and eco-friendly products instead of general-purpose products, Motir said.
The South Korean government will also provide a customised support package worth W2.1 trillion, which will include financial, taxation, regulatory, cost structure improvement, employment, and technology development assistance for the firms' restructuring implementation. But the specific financial measures are to be finalised by the Korean Development Bank after consultations with institutional creditors.
Other key producers including YNCC, GS Caltex, LG Chem, S-Oil, SKGC, and KPIC also submitted their business restructuring proposals in December 2025, and are under government review. The submitted plans would meet the collective target to reduce the nation's naphtha cracking capacity by 2.7mn-3.7mn t, according to the ministry. But revisions to the plans have been requested, and finalised drafts for restructuring plans for the Yeosu and Ulsan petrochemical complexes are expected by the end of the first quarter of 2026, said market sources close to South Korean cracker operators.
