The South Korean government announced a 2.1 trillion-won ($1.45 billion) financial package to support the restructuring of Lotte Chemical Corp. and HD Hyundai Chemical at the Daesan industrial complex. This is the first authorized project under the petrochemical sector's broader self-rescue plan. The initiative aims to address supply gluts by reducing capacity and shifting toward high-value and eco-friendly products.
The South Korean government revealed on Wednesday a 2.1 trillion-won ($1.45 billion) support package for the restructuring efforts of Lotte Chemical Corp. and HD Hyundai Chemical at the Daesan petrochemical complex in Seosan, South Chungcheong Province, about 100 kilometers south of Seoul. The two firms finalized their plan last year, involving the spin-off of Lotte Chemical's naphtha cracking center (NCC) into a new entity jointly with HD Hyundai Chemical. This will voluntarily cut NCC capacity by 1.1 million tons to tackle a supply glut and facilitate a shift to high-value and eco-friendly products.
Announced at a meeting of economy and industry ministers, the package allocates around 2 trillion won to ease the financial strain from facility closures. It also offers tax incentives, faster reviews for NCC integration, and funding for research and development (R&D) focused on advanced petrochemicals for sectors like semiconductors, displays, aerospace, and secondary batteries. Additionally, the Daesan complex will be designated a special zone for direct local electricity transactions to lower costs, with zero tariffs on imported raw materials such as naphtha and crude oil.
To enhance the sector's long-term competitiveness, a comprehensive plan for the chemical ecosystem is set for the first half of the year, potentially covering AI-driven transformations and export growth. Finance Minister Koo Yun-cheol stated, "The Daesan project will become a milestone and a model case for the revitalization of the petrochemical industry," while calling on other firms to accelerate voluntary restructuring. This support aligns with broader efforts to help key industries navigate structural challenges amid shifting global economic and industrial paradigms.
Fourteen other major petrochemical companies have submitted their restructuring plans, following the government's pledge last year to back self-rescue initiatives.
