South Korea to cut ethylene output in restructuring of largest petrochemical complex
South Korea has approved a plan to restructure the country's largest petrochemical complex, Yeosu, the Industry Ministry said on Wednesday, as the government steps up efforts to overhaul a sector hit by oversupply and weak margins.
The restructuring is expected to idle two ethylene production facilities with annual capacity of 1.39 million metric tons over three years, helping ease oversupply and improve profitability, the ministry said.
The plan, submitted by Yeochun NCC, Lotte Chemical, Hanwha Solutions and DL Chemical, will combine Yeochun NCC with Lotte Chemical's naphtha cracking centre and basic materials operations in Yeosu, including polyethylene and polypropylene businesses, the ministry said.
Hanwha Solutions and DL Chemical will also contribute downstream assets, including polyethylene and adhesive and coating resin businesses, to the new entity.
Hanwha and DL Chemical plan 545 billion won ($368.13 million) in rights issues to repay Yeochun NCC's existing debt, and will invest 253.2 billion won in pipelines, infrastructure and added-value products, the ministry said.
The government will provide more than 700 billion won in support, including 650 billion won-plus in financing as well as tax relief, regulatory improvements, employment support and research and development funding.
The Yeosu plan is South Korea's second approved petrochemical restructuring project, following a go-ahead for the Daesan complex announced in February.
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