South Korea's HD Hyundai, Lotte Chemical submit plan to restructure petrochemical businesses
The logo of Lotte Chemical is seen at its office building in Seoul, South Korea, October 11, 2017. Picture taken on October 11, 2017. REUTERS/Kim Hong-Ji
SEOUL :South Korea's HD Hyundai and Lotte Chemical have submitted a plan to the industry ministry on restructuring their petrochemical businesses, the companies said in separate regulatory filings on Wedneday.
Under the plan, Lotte will spin off its business in Daesan city, South Korea, and merge it with HD Hyundai Chemical, in an effort to ease overcapacity at nathpha-cracking centres in the industry, the companies said.
The plan is part an industry-wide effort to ease a supply glut in South Korea's petrochemical sector. In August, President Lee Jae Myung administration pushed firms to cut as much as 25 per cent of the country's annual capacity, saying the sector was in "crisis" and needed to boost efficiency and raise margins.
Ten petrochemical firms agreed on the goal at the time and were asked to come up with their own plans.
Lotte said the merger is to increase efficiency and the stability of operations at their naphtha-cracking centres, without elaborating. The companies said they will also adjust business portfolios to focus on core businesses.
Lotte's naphtha cracking facilities in Daesan have a capacity of 1.1 million tons, while HD Hyundai's operations have a capcity of 850,000 tons.
HD Hyundai Chemical is a joint venture created by HD Hyundai Oilbank and Lotte Chemical in 2014.
