Lotte Chemical restructures operations, merging Daesan plant with HD Hyundai to boost efficiency and accelerate transition toward high-value specialty chemicals.
Lotte Chemical has initiated a significant restructuring of its petrochemical operations, taking a proactive approach under South Korea’s “Special Act on the Promotion of Corporate Vitality.” As part of this transformation, the company plans to spin off its Daesan naphtha cracking center (NCC) plant and merge the newly formed entity with HD Hyundai Chemical. This strategic move is designed to address persistent industry challenges such as global oversupply while accelerating the company’s shift toward higher-value products.
The Daesan facility spin-off will lead to the creation of a 50:50 joint venture between Lotte Chemical and HD Hyundai Oilbank. Both parties are expected to invest approximately 600 billion won each into the integrated company. The agreement, which is backed by government approval, is scheduled to be formalized in June 2026, with the merger targeted for completion by September of the same year. As part of the restructuring, the companies will consolidate production capabilities and shut down a 1.1 million-ton cracker, a move intended to eliminate inefficiencies and improve overall operational performance.
Through this integration, Lotte Chemical aims to strengthen its vertical value chain—from feedstock sourcing to finished products—while establishing a more streamlined and cost-effective production system. This will enhance manufacturing competitiveness and support the company’s long-term transition toward a portfolio centered on specialty and high-margin chemical products.
In parallel, Lotte Chemical is undertaking additional restructuring initiatives. In December 2025, the company submitted a supplementary business reorganization plan for the Yeosu Industrial Complex, involving collaboration with Hanwha Solutions, DL Chemical, and Yeochon NCC. A detailed implementation roadmap was later filed on March 20, 2026, further accelerating efforts to optimize its operational base and eliminate redundant capacities.
Alongside restructuring, Lotte Chemical is rapidly advancing its pivot toward high-value-added businesses. The company has set a target to increase the share of functional materials to over 60% of its portfolio by 2030. This strategy reflects its ambition to evolve into a specialty chemicals leader with stronger profitability and sustainable growth.
Several subsidiaries are playing a key role in this transformation. Lotte Engineering Plastics is developing South Korea’s largest single compounding facility at the Yulchon Industrial Complex, with an annual capacity of 500,000 tons. While partial operations have already begun, full completion is expected in the second half of 2026. The plant will supply customized, high-performance materials to sectors such as mobility and IT, and is expected to expand into advanced applications including physical AI, aerospace, and space technologies.
In the energy sector, Lotte SK Enerroot launched a 20MW hydrogen fuel cell power plant in Ulsan in June 2025. The company plans to build four additional plants by the end of 2026, aiming to provide a stable 80MW electricity supply over a 20-year period. Meanwhile, Lotte Air Liquide Enerhi has completed the country’s largest 450-bar high-pressure hydrogen distribution center in Daesan, which began operations in November 2025 and can support thousands of hydrogen-powered vehicles daily.
Lotte Chemical is also strengthening its position in advanced materials. Lotte Energy Materials is expanding production of high-end copper foil for batteries, semiconductors, and AI applications, enhancing its global footprint. Additionally, Handuck Chemical, a joint venture with Tokuyama Corporation, is planning to expand its production of TMAH, a critical semiconductor material, by constructing a new facility in Pyeongtaek.
Overall, Lotte Chemical’s restructuring and investment strategy reflects a comprehensive effort to improve efficiency, reduce exposure to commodity cycles, and position itself as a competitive player in the global specialty chemicals and advanced materials market.
