South Korea reviews Yeosu petrochemical restructuring plan
South Korea is reviewing a plan to merge major petrochemical units in Yeosu. The new entity will focus on high-value products with state financial support.
Authorities in South Korea have received a formal restructuring proposal for the country’s largest petrochemical complex in Yeosu, signaling a major step in the government’s strategy to overhaul the struggling industrial sector. The Industry Ministry announced on Friday that the plan focuses on the consolidation of key assets to improve global competitiveness and operational efficiency.
The proposed restructuring centers on the integration of Yeochun NCC—a joint venture between Hanwha Solutions Corporation and DL E&C Co.,Ltd.—with the Yeosu-based naphtha cracking center operated by Lotte Chemical Corporation. This merger would create a single, unified entity. Furthermore, downstream assets including the polyethylene units of DL Chemical and various regional business segments from Hanwha Solutions and Lotte Chemical are slated to be folded into the new organization.
According to the ministry, the plan involves the strategic adjustment of existing naphtha cracking and commodity chemical facilities. The new entity is expected to pivot its production toward high-value products, such as medical-grade low-density polyethylene and functional polyolefin elastomers used in the automotive and power cable sectors.
Industry Minister Kim Jung-kwan highlighted the government's dual focus on structural reform and supply chain stability.
"While pursuing the mid-to-long-term industrial policy of restructuring, we will do our best to support securing naphtha supply for petrochemical companies to stabilise supply chains."
To support the transition, the ministry will convene a dedicated committee to review the proposal. The government is also preparing a tailored support package that includes financing, tax incentives, research and development grants, and regulatory relief. This approach follows a similar support model implemented for the restructuring of the Daesan petrochemical complex earlier this year.
The South Korean government has been increasingly vocal about the crisis facing the petrochemical sector, urging companies to accelerate restructuring efforts to boost flagging margins. This latest development follows an agreement reached last year by ten major domestic petrochemical firms to reduce naphtha-cracking capacity and streamline their operations.
