1.39 Million Tons/Year! Two South Korean Ethylene Plants Approved for Permanent Shutdown

Official Approval for Yeosu Petrochemical Complex Restructuring

On July 22, South Korea’s Ministry of Trade, Industry and Energy formally approved the business restructuring proposal for the Yeosu Petrochemical Complex, jointly submitted by Yeochun NCC (YNCC), Lotte Chemical, Hanwha Solutions and DL Chemical. Under the approved plan, two ethylene production units with a combined annual capacity of 1.39 million tons will be permanently closed within three years.

YNCC will permanently decommission its idle No.3 plant (470,000 tons/year) and No.2 plant (920,000 tons/year). The No.1 plant (900,000 tons/year) of YNCC and Lotte Chemical’s 1.23 million‑ton‑per‑year Yeosu cracker will remain in operation.

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New Joint‑Venture Entity and Capital Investment Arrangements

YNCC is a joint venture operated by DL Chemical and Hanwha Solutions. According to the restructuring framework, Hanwha Solutions and DL Chemical will inject downstream assets including polyethylene, adhesives and coating resins as equity contributions. Lotte Chemical will spin off its naphtha cracking and polyolefin raw‑material businesses at the Yeosu site and merge them into YNCC to build a brand‑new integrated operating company. Lotte Chemical, Hanwha Solutions and DL Chemical will each hold an equal one‑third equity stake in the new entity.

Participating enterprises plan to invest roughly 800 billion Korean won for corporate self‑rescue and restructuring. Hanwha Solutions and DL Chemical intend to raise 545 billion won through rights offerings to settle YNCC’s existing debts. Another 253.2 billion won will be allocated for pipeline and infrastructure construction as well as R&D of high‑value‑added chemical products.

The South Korean government will deliver more than 700 billion won in comprehensive support, covering over 650 billion won of financial subsidies, plus tax incentives, regulatory optimization, employment support and research‑and‑development funding.

Background: South Korea’s Petrochemical Industry Capacity‑Cut Initiative

This represents the second government‑endorsed petrochemical restructuring case, following the Daesan Industrial Complex reorganization completed by Lotte Chemical and HD Hyundai Chemical back in February 2026.

South Korea’s petrochemical sector has suffered severe operating pressure in recent years. Persistent capacity expansion triggered widespread supply surplus and sharp profit margin erosion across the whole industry. The South Korean government rolled out a strategic target last year for voluntary ethylene capacity cuts of 2.7‑3.7 million tons per year against the original national total capacity of approximately 14.7 million tons per year.

After finishing the two major restructuring projects, South Korea will have permanently eliminated no less than 2.5 million tons of annual ethylene capacity. Nevertheless, the Ulsan petrochemical hub, one of Korea’s three core petrochemical clusters, still has not released concrete restructuring schemes, remaining the key variable for the government to fulfil its capacity‑reduction objectives.

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