South Korean petrochemical firms seek approval for major restructuring deal

SEOUL, November 26 (AJP) - Lotte Chemical and HD Hyundai Chemical have submitted a preliminary review request for their planned merger of petrochemical facilities, South Korea’s Fair Trade Commission (FTC) said on Wednesday.

This marks the first restructuring case to move forward under a government-led initiative to revive the struggling petrochemical sector.

Both companies operate naphtha cracking facilities within the Daesan petrochemical complex in South Chungcheong Province. The FTC’s preliminary review is intended to assess whether the deal could substantially restrict competition before the companies proceed with a formal merger filing.

Under the restructuring plan, Lotte Chemical will spin off its Daesan plant and merge the unit with HD Hyundai Chemical, after which Lotte Chemical will acquire additional shares in the combined company. Lotte Chemical and HD Hyundai Oilbank — the parent company of HD Hyundai Chemical — will ultimately each hold a 50 percent stake in the merged entity.

The move comes as South Korea’s petrochemical industry faces its most severe downturn in years, driven by global overcapacity, weak demand, and intensifying competition from China and the Middle East.

Margins for key products such as ethylene and polyethylene have fallen sharply, and domestic firms have been under pressure to consolidate production, close inefficient facilities and scale up investments in higher-value materials.

* This article, published by Aju Business Daily, was translated by AI and edited by AJP.

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