en.Wedoany.com Report, On March 20, South Korea's Ministry of Trade, Industry and Energy announced that the country's largest ethylene producers, YNCC, Lotte Chemical, Hanwha, and DL Chemical, have submitted the final business restructuring plan for the "Yeosu No. 1 Project" to advance the structural adjustment of South Korea's petrochemical industry. The plan is currently under review by relevant departments.
The core of this restructuring is to split Lotte Chemical's Yeosu cracker (NCC), which has an annual capacity of 1.23 million tons, and integrate it with YNCC to form a new integrated entity. YNCC is a joint venture between DL Chemical and Hanwha, operating three units in Yeosu with a total annual capacity of 2.28 million tons. The new company will be owned equally by the three companies, each holding a one-third stake, sharing the required funds and risks for the restructuring.
Industry sources pointed out that this integration will drive the industry towards centralization and scaling up. At the same time, fluctuations in naphtha supply due to geopolitical risks are further accelerating the structural upgrade of South Korea's petrochemical industry.
According to the plan, YNCC will permanently shut down its currently idled No. 3 unit with an annual capacity of 470,000 tons and its No. 2 unit with an annual capacity of 910,000 tons, retaining only the more efficient No. 1 unit with an annual capacity of 900,000 tons and Lotte Chemical's Yeosu unit. Simultaneously, the three companies will transfer their downstream ethylene product capacities, such as polyethylene and petroleum resin, into the new entity to ensure stable revenue.
This integration is a key measure under South Korea's petrochemical capacity reduction policy launched in August 2025, which aims to cut ethylene production capacity by 2.7 to 3.7 million tons annually. As South Korea's largest ethylene producer, YNCC's capacity will shrink by approximately 60% after shutting down two units. By joining forces with Lotte Chemical to integrate their Yeosu naphtha cracking operations, the move aims to resolve overcapacity and improve operational efficiency. Previously, Lotte Chemical had already invested $545 million in a joint venture project with Hyundai Chemical in Daesan to advance restructuring.
