- Registration date2026-02-25
- Attached file
The Ministry of Trade, Industry and Resources (MOTIR, Minister JK Kim) announced on February 23, 2026, that it approved the final plan for the “Daesan No. 1” restructuring project submitted by HD Hyundai Oilbank, HD Hyundai Chemical, and Lotte Chemical. This marks the first approval under the Petrochemical Industry Restructuring Roadmap released in August 2025.
Under the plan, Lotte Chemical will separate its Daesan operations and merge the business with HD Hyundai Chemical to integrate the naphtha cracking center (NCC) and downstream facilities. HD Hyundai Oilbank and Lotte Chemical will inject a combined KRW 1.2 trillion into the newly established entity, adjusting HD Hyundai Chemical’s ownership structure from 60:40 to 50:50. The companies will finalize the setup after signing the merger-related agreements, securing board approvals, and completing the spin-off and merger procedures.
In coordination with relevant agencies, MOTIR prepared a tailored support package that includes financing of up to KRW 2 trillion, tax measures, and steps to streamline regulatory approvals—including merger review and permitting/licensing procedures. The package also provides KRW 69–115 billion to ease utility and raw-material cost burdens, as well as measures to address industrial and employment challenges in affected regions. For R&D, MOTIR will fast-track support starting this year for two high-value projects requested by the approved companies, totaling KRW 26 billion. Over the longer term, MOTIR will pursue additional large-scale programs to support the shift to higher value-added and greener production.
During the three-year restructuring period, the Daesan No. 1 project is expected to ease oversupply at the complex by suspending one ethylene production facility and scaling back low-margin downstream operations, while improving utilization across remaining assets. In addition, vertical integration across the refining–petrochemical value chain is expected to bolster feedstock security and cost competitiveness, while enabling flexible output adjustments in line with refining margins and naphtha spreads.
Once the integrated corporation is in place, the combined business is expected to move away from commodity-driven exports by expanding high-value materials, including high-elastic lightweight materials and organic solvents for electrolytes. The business will also shift to lower-carbon feedstocks and processes by using bio-based naphtha and introducing ethane as a feedstock. Operational integration, backed by shareholder measures, is expected to strengthen the company’s financial position.
MOTIR will expedite follow-up restructuring projects, using public-private consultations to refine project-specific proposals submitted in December 2025 and to help companies finalize and file their restructuring plans. The ministry will also promptly draft the enforcement decree for the Special Act on Strengthening and Supporting the Competitiveness of the Petrochemical Industry, establishing the institutional basis to implement approved restructuring plans. In March 2026, the government will launch a Chemical Industry Ecosystem Forum to develop policy measures that limit the impact of restructuring on local economies, employment, and SME suppliers. Building on the forum’s discussions, the government will prepare a comprehensive support package for the sector in the first half of 2026.
On February 25, 2026, MOTIR held a CEO roundtable at the Korea Trade-Investment Promotion Agency (KOTRA) to outline the support package and discuss next steps for implementation. At the meeting, Minister JK (Jung-Kwan) Kim thanked the companies behind the first approved project and called for thorough implementation to keep the plan on track.
Minister Kim described the Daesan No. 1 project as the first tangible outcome of government–industry coordination, noting that it will help accelerate the petrochemical industry’s restructuring. He added that the ministry will work closely with companies to advance follow-up projects and will “put in place all necessary support to minimize negative impacts on local economies, employment, and SMEs.”