LG Chem Plans to Shut South Korea NBR Business Permanently, Final Decision may come in October

In a major turn of events, key South Korean rubber manufacturer LG Chem is considering the closure of its Nitrile Butadiene Rubber (NBR) business in South Korea towards the end of 2021. However, the company is yet to come to a final decision, although assumptions have been made that Board of Directors meeting in October this year could put the final nail in the coffin for LG Chem in terms of NBR business, source close to the company confirmed ChemAnalyst.

LG Chem has been enduring a prolonged phase of accumulated revenue deficit and it’s been exacerbated by the pandemic where demand has shrunken for NBR and further intensified by the domestic competition due to other existing players including Kumho Petrochemical which resulted in dwindling margins, source also reported.

Discontinuation of the production and sales can be effective as early as 31^st December 2021 given the reposition plan is confirmed in October this year.

As per ChemAnalyst, "This will be monumental as LG chem has been a critical player in South Korea in terms of NBR rubber and business closure may avail opportunities to other global players like Zeon which would prefer to show their dominance in the South Asian market similar to their supremacy in North America.”

Since Q2 last year, LG Chem has been in the spotlight as LG Chem and Petronas (State owned Malaysian Chemical Group) started a joint venture to build an NBR plant in Pengerang, Malaysia with production capacity of 200KTPA. Recently, a subsidiary of LG Chem started NBL (Nitrile Butadiene Latex) production in China to seize NBL glove demand. From these events, it can be concluded that LG Chem is going global to capture demand from various other markets and the current move could be strategic step to deal with the challenging business environment.

Although any conclusion at this moment would be mere speculation as official decision is yet to be made over the NBR business.