'Petrochemical Restructuring Deadline': "Daesan Opens the Door, Yeosu Decides the Fate"

Petrochemical Restructuring: Yeosu Becomes the Watershed After Daesan
Government Pressures Companies: "No Extension for the End-of-December Deadline"
Yeosu Firms Urged to Make Decisive Moves

The Ministry of Trade, Industry and Energy has visited the Yeosu National Industrial Complex, just over a month before the deadline for petrochemical business restructuring, urging companies to make swift decisions. This is the ministry’s third on-site visit since the Ulsan meeting in September. With Lotte Chemical recently making a surprise decision to halt operations at its naphtha cracking center (NCC) in the Daesan Industrial Complex, opening the door to industry-wide restructuring, there are expectations that developments in the Yeosu region will become a watershed moment for the sector’s overhaul.

On November 26, Minister of Trade, Industry and Energy Kim Jeongkwan held a meeting on petrochemical business restructuring at the Yeosu National Industrial Complex, stressing that the government’s deadline for submitting business restructuring plans “cannot be postponed any further.” Previously, in August, the government announced the “Petrochemical Industry Leap Forward Strategy,” which outlined a restructuring direction centered on facility downsizing, transition to high value-added products, securing financial soundness, and minimizing the impact on the regional economy. The roadmap called for companies to submit restructuring plans by the end of December.

Minister Kim stated, “If Daesan opened the door to business restructuring, Yeosu will determine its fate,” making it clear that “there are absolutely no plans to extend the December deadline.” He further warned, “Companies that fail to meet the deadline will be excluded from government support.”

In fact, as the downturn in the petrochemical market has dragged on, the Daesan Industrial Complex is being recognized as the first area in the industry to implement voluntary restructuring. Lotte Chemical is seeking to halt operations at its Daesan NCC to alleviate chronic losses and is pushing to contribute the related facilities in kind to HD Hyundai Chemical. Industry insiders say that “halting the 1.1 million-ton NCC could prevent losses worth hundreds of billions of won.” While the government had previously designated three industrial complexes for simultaneous restructuring, Daesan is the first to take concrete action.

In contrast, despite being the largest petrochemical cluster in the country, the Yeosu complex has seen slow progress due to complex and conflicting interests among companies. The Ministry’s decision to hold this meeting in Yeosu is being interpreted as a strong message for companies to submit clear restructuring plans within the remaining period.

Immediately after the meeting, Minister Kim visited LG Chem’s Yeosu site to inspect production and safety management, urging, “Yeosu companies should not view this restructuring merely as an opportunity to improve existing facility efficiency, but as a chance to transform into globally competitive specialty-focused companies.” He especially emphasized, “The safety of not only employees but also partner company workers must be the top priority.”

Additionally, a “Petrochemical and Steel Industry Ecosystem Meeting” was held with the participation of chemical companies, maintenance firms, and steel companies from the Yulchon Industrial Complex in Yeosu. Companies voiced a range of concerns, including the burden of increased industrial electricity rates, the need for prompt enactment of the special law on petrochemicals, support for visa issuance related to investments in the United States, and expansion of national guarantee limits for overseas plant orders.

Minister Kim stated, “We are acutely aware of the increased burden on companies due to electricity rate hikes, and future adjustments will be discussed with the power authorities, taking into account industrial competitiveness.” He added, “Since the special law on petrochemicals has already passed the standing committee, we are preparing for implementation in the first quarter of next year.” He also explained plans to operate a visa issuance support desk and to provide support through export finance programs from the Korea Trade Insurance Corporation.

The government has also activated safeguards to minimize the shock to the regional economy. Yeosu, Seosan, Pohang, and Gwangyang have been designated as proactive response areas for industrial or employment crises, with step-by-step implementation of worker retraining and restructuring support programs. Minister Kim said, “Through the ‘Five-Region, Three-Specialty’ regional growth engine strategy, we will help local areas overcome crises and establish new growth axes.”

The government plans to promptly begin reviewing restructuring plans submitted by the end of the year, comprehensively evaluating the level and specificity of self-help efforts, and will announce support measures in line with the timing of approvals. The soon-to-be-announced “Chemical Industry R&D Investment Roadmap” will include strategies for transitioning to high value-added products and plans for large-scale research and development investment, with priority support given to companies that implement restructuring.

This content was produced with the assistance of AI translation services.