First Petrochemical Restructuring Entity Launched... H&L Advanced Begins Full-Scale Reduction of 1.1 Million Tons at Daesan NCC

Joint Venture: 50-50 Split Between HD Hyundai Oilbank and Lotte Chemical

1.1 Million Tons of NCC Operations to Be Suspended Over Three Years

Additional Investment of KRW 1.2 Trillion by Both Companies... Shift Toward Specialty Products

The first consolidated entity in the domestic petrochemical restructuring initiative has been established. H&L Advanced, formed through the merger of HD Hyundai Chemical and Lotte Daesan Petrochemical, will begin by reducing naphtha cracking center (NCC) operations in Daesan. The company plans to decrease its proportion of general-purpose petrochemical products and restructure its business focus around high-value-added products.

Lotte Chemical Daesan Plant. Lotte Chemical

According to the industry on September 1, HD Hyundai Chemical completed its merger with Lotte Daesan Petrochemical and newly launched as H&L Advanced on this day. Ownership of the consolidated corporation is equally split, with both HD Hyundai Oilbank and Lotte Chemical holding 50% each. Previously, HD Hyundai Oilbank owned 60% of HD Hyundai Chemical, while Lotte Chemical owned 40%.

In preparation for the merger, Lotte Chemical undertook a physical division of its Daesan site in June, creating Lotte Daesan Petrochemical as a new entity. The initial co-CEOs of the consolidated corporation will be finalized through the board of directors in the future. It is known that Cheon Yangsik, former CEO of Lotte Daesan Petrochemical, has been designated as the co-CEO from Lotte Chemical's side.

Following a government-approved business restructuring plan, H&L Advanced will shut down the operation of Lotte Chemical Daesan NCC with a capacity of 1.1 million tons over the next three years. At the same time, it will reduce operations of facilities that produce low-profit, general-purpose products, aiming to alleviate market oversupply and improve profitability.

The company also plans to strengthen the connection between its refining and petrochemical businesses. By linking HD Hyundai Oilbank’s refining operations with the consolidated entity’s petrochemical business, H&L Advanced aims to improve efficiency in raw materials and production, and restructure its portfolio around high-value specialty products.

Financial support will be provided in parallel. HD Hyundai Oilbank and Lotte Chemical are pushing for an additional combined capital injection of 1.2 trillion won into the consolidated company. The government has also assembled a support package totaling approximately 2.1 trillion won, including financial and tax relief measures.

The 1.1 million tons of Daesan NCC capacity being reduced through this consolidation account for roughly 30–40% of the domestic NCC reduction target of 2.7 to 3.7 million tons presented by the government last year. As the first large-scale facility reduction aimed at easing oversupply in the petrochemical industry, the move is expected to impact future restructuring efforts at other industrial complexes as well.

Following Daesan, restructuring is also underway in Yeosu. Yeocheon NCC is moving to shut down its Yeosu Plant 2 and Plant 3 operations and merge Plant 1 with Lotte Chemical. This plan has also received government approval and, as the second official restructuring case, is now proceeding in earnest.

This content was produced with the assistance of AI translation services.