H&L Advanced, the first integrated company formed from the restructuring of the petrochemical sector, has committed to paying suppliers within 10 days after the end of the month, even if some facilities cease operations. This initiative aims to ensure transaction stability and cash flow, preventing the burden of restructuring from falling on small and medium-sized suppliers.
On September 14, the Fair Trade Commission held a signing ceremony for the partnership agreement with H&L Advanced and its suppliers at the HD Hyundai Oilbank Daesan plant in South Chungcheong Province. H&L Advanced was established on September 1 through the merger of Lotte Daesan Petrochemicals, which was spun off from HD Hyundai Chemical, marking the first integrated company supported by the government in the petrochemical sector's restructuring.
Previously, on August 20, the Fair Trade Commission conditionally approved the merger of Daesan No. 1, imposing corrective measures such as limiting domestic price fluctuations for low-density polyethylene (LDPE) and ethylene-vinyl acetate (EVA) for five years and ensuring supply stability.
While the previous measures focused on protecting domestic demand companies purchasing products, this voluntary agreement aims to enhance transaction stability for suppliers providing products and services to the integrated company. It is being pursued separately from the merger's corrective measures.
This agreement is the first partnership agreement established since the launch of the integrated company following the restructuring. It was created through voluntary discussions among the parties involved to reduce transaction uncertainties for suppliers responsible for maintenance, automated warehouse operations, and packaging supply.
The agreement focuses on improving payment conditions, ensuring transaction stability, and supporting suppliers' future adaptability. Suppliers will receive payments twice a month, within 10 days after the end of the month. Payments will be made in cash or cash-equivalent forms, with early payments during holidays. This measure aims to assist small and medium-sized suppliers in securing liquidity and stabilizing management.
Even if some facilities cease operations due to restructuring, existing supplier relationships will be maintained. The company will not unilaterally terminate contracts or halt transactions with long-standing suppliers and will engage in good faith discussions regarding price adjustments due to reduced transaction volumes.
Support will also be provided for suppliers' environmental, social, and governance (ESG) initiatives and carbon neutrality through education and consulting. The goal is to help suppliers not only address immediate financial and workload issues but also adapt to the changing industrial environment following the restructuring.
The Fair Trade Commission plans to ensure that this agreement is not a one-time event but leads to improved transaction practices and sustainable cooperation across the industry.
Choo Byung-ki, chairman of the Fair Trade Commission, emphasized, "The industrial ecosystem cannot function solely on the strength of one large company. It is possible because numerous partner companies have maintained equipment, transported raw materials, and ensured safety on-site." He added, "Trust will only be established when payments are made on time and commitments to maintain transaction relationships are fulfilled, and that trust will return as the strongest competitive advantage."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.