Lotte Chemical Shuts Down Yeosu Plant Amid Industry Crisis

Lotte Chemical Corp., a major player in South Korea's petrochemical industry, has initiated the shutdown of its ethylene glycol (EG) and methyl methacrylate (MMA) production facilities at Yeosu Plant 2. This significant move comes as the company grapples with persistent losses and broader industry challenges.

The decision to shutter these facilities, which were once key revenue drivers for Lotte Chemical, reflects the severe downturn in the global petrochemical market. The industry has been plagued by oversupply, particularly from China, which has aggressively expanded its production capacity in recent years. This has led to a decline in demand and prices for various petrochemical products, including EG and MMA.

Lotte Chemical's decision to "box-up" the facilities, a process involving emptying and sealing equipment, signals its intent to potentially dismantle and sell them off. This move underscores the severity of the situation and the company's efforts to streamline its operations and reduce costs.

An unnamed official of Yeosu National Industrial Complex said, "We are preparing for box-up by reducing production at the EG and MMA production facilities of Lotte Chemical's Yeosu 2 plant. The process of stopping the factory takes time, and the factory will be cleaned up soon when the box-up begins."

The challenges faced by Lotte Chemical are not isolated. Other major players in the Korean petrochemical industry, such as LG Chem and Hanwha Solutions, are also grappling with similar issues. LG Chem has halted operations at its styrene monomer (SM) plant, while Hanwha Solutions has resorted to issuing perpetual bonds to strengthen its financial position.

In response to the crisis, the South Korean government is preparing a comprehensive support package for the petrochemical industry, which is expected to include tax incentives and regulatory reforms. The aim is to bolster the industry's competitiveness and facilitate consolidation among struggling companies.

Lotte Group, the parent company of Lotte Chemical, has also undertaken significant organizational changes. The company has replaced numerous executive positions, including several CEOs within the chemical division. This leadership overhaul is intended to inject fresh perspectives and drive strategic transformation.

As the petrochemical industry continues to navigate these turbulent times, Lotte Chemical's decision to shut down key facilities highlights the need for innovative solutions and strategic adjustments to ensure long-term sustainability.

About Lotte Chemical

LOTTE Chemical is a leading global chemical company based in South Korea. It produces a wide range of petrochemical products, including basic chemicals, synthetic resins, and functional materials. The company is committed to innovation and sustainability, aiming to contribute to the development of the chemical industry while minimizing environmental impact.