HD Hyundai Oilbank and Lotte Chemical each invested 600 billion won, totaling 1.2 trillion won, to officially establish the Daesan joint venture ‘H&L Advanced’ as of September 1, 2026, holding a launch ceremony at the Daesan plant on September 4. The merger is reported to be the Ministry of Trade, Industry and Energy’s “Daesan Project No. 1,” the first case of a government-approved industrial restructuring to actually go into operation.
The newly launched H&L Advanced is reported to be structured with HD Hyundai Oilbank and Lotte Chemical each holding a 50% stake. As part of this integration, Lotte Chemical’s Daesan Naphtha Cracking Center (NCC) is reported to suspend operation of 1.1 million tonnes of capacity for the next three years. The government is reported to be providing a support package worth a total of 2.1 trillion won, including financial and tax incentives, for this industrial restructuring.
Each company invested 600 billion won, for a total of 1.2 trillion won, with a 50-50 equity split. The naphtha cracking facility suspension covers 1.1 million tonnes of capacity over the next three years. The government support package, combining financial and tax measures, totals 2.1 trillion won. The joint venture was established on September 1, 2026, with the official launch ceremony held on September 4.
South Korea’s petrochemical industry has reportedly faced persistent calls for restructuring and consolidation in recent years amid oversupply of commodity petrochemical products and deteriorating profitability. This integration between HD Hyundai Chemical and Lotte Chemical is reported to be the first case of implementation under the government’s industrial restructuring policy.
The launch of this joint venture is seen as a symbolic case showing that restructuring in South Korea’s petrochemical industry has entered actual implementation with government support. The approach of two major petrochemical companies jointly operating production facilities in the Daesan area is interpreted as an attempt to reduce redundant capital investment and improve cost competitiveness, aligning with the broader consolidation and restructuring trend seen across the global petrochemical industry. The suspension of Lotte Chemical’s Daesan NCC could result in a reduction of South Korea’s total naphtha cracking capacity, potentially affecting ethylene and polyolefin supply chains both domestically and internationally to some degree. The government’s provision of a 2.1-trillion-won support package illustrates policy commitment to petrochemical industry restructuring, and is likely to serve as a reference case for similar consolidation discussions among other South Korean petrochemical companies going forward. However, the actual operational performance and profitability improvement of the joint venture remain to be seen.
How H&L Advanced’s actual operating structure and workforce allocation will be organized is the first point to confirm. Whether Lotte Chemical’s suspended Daesan NCC actually resumes operation after three years, or leads to permanent closure, is also worth watching. Whether this restructuring model spreads to other South Korean petrochemical companies (in Yeosu, Ulsan, and elsewhere) is another point to watch. How the government’s 2.1-trillion-won support package will specifically be implemented (tax benefits, financial support, etc.) also remains to be confirmed.