South Korea’s Ministry of Trade, Industry and Energy reportedly gave final approval on July 20 to the ‘Yeosu No. 1’ petrochemical business realignment plan submitted jointly by Yeochun NCC, Lotte Chemical, Hanwha Solutions, and DL Chemical. This is the second such case following the Daesan No. 1 realignment in February, and reportedly involves cutting naphtha cracking center (NCC) capacity at the Yeosu National Industrial Complex by 1.39 million tons per year, with the government preparing a support package of over KRW 700 billion.
Under the realignment, Yeochun NCC will reportedly shut down its No. 2 plant in addition to the already-idled No. 3 plant, while the remaining No. 1 plant will absorb Lotte Chemical’s Yeosu plant naphtha cracking, polyethylene (PE), and polypropylene (PP) basic materials businesses through a spin-off and merger. The resulting integrated entity is reportedly structured with Lotte Chemical, Hanwha Solutions, and DL Chemical each holding a 33.3% stake.
The realignment will reportedly reduce Yeochun NCC’s ethylene production capacity from 2.28 million tons to about 900,000 tons, a cut of 1.39 million tons (approximately 39.5%) per year. Ahead of establishing the integrated entity, Hanwha Solutions and DL Chemical will each reportedly inject KRW 272.5 billion, totaling KRW 545 billion, to repay Yeochun NCC’s existing debt. The government has reportedly prepared a support package exceeding KRW 700 billion combining financing, tax, licensing, and R&D (Research and Development) support, with the Korea Development Bank providing KRW 450 billion in financing.