Communicator

Satellite View of the Daesan Petrochemical Complex with Manufacturing Sites from 롯데케미칼 (Lotte Chemical) | LG화학 (LG Chem) | 한화토탈에너지스 (Hanwha TotalEnergies) | HD현대케미칼 (HD Hyundai Chemical) | HD현대오일뱅크 (HD Hyundai Oilbank) | 코오롱인더스트리 (Kolon Industries) | 한화솔루션 (Hanwha Solutions) | 현대OCI (Hyundai OCI) | via Goggle Maps

South Korea’s petrochemical sector is undergoing a pivotal transformation as Lotte Chemical and Hyundai Chemical advance plans to integrate their naphtha cracking facilities at the Daesan Petrochemical Complex. This consolidation is a direct response to China’s overwhelming ethylene overcapacity—a structural market shift that has eroded profitability across Asia. By merging operations, the companies aim to fortify competitiveness through operational synergies and strategic realignment, setting a precedent for industry-wide adaptation.

China’s Ethylene Oversupply: The Imperative for Restructuring

China’s aggressive petrochemical expansion has created a global supply glut, with ethylene capacity in 2025 is forecast to be 121% more than local demand. This surplus has flooded international markets, compressing margins for producers reliant on naphtha feedstock, like those in Korea. Lotte Chemical’s 64% operating profit decline and HD Hyundai’s 58% drop reflect the severity of this pressure. The Daesan integration addresses this crisis by targeting ₩70–100 billion in annual savings through shared infrastructure, streamlined management, and optimized feedstock procurement.


Daesan Petrochemical Complex Aerial View | Hyundai Engineering & Construction (Accessed 14^th June 2025)

The Daesan Integration: Scope and Strategic Rationale

The merger centers on combining Lotte Chemical’s 1.1 million-ton ethylene facility with HD Hyundai Chemical’s 850,000-ton unit at Daesan—a joint venture already co-owned by both entities. This consolidation will unify control over naphtha cracking technologies and derivative production, including polyethylene, propylene, and aromatics. Critically, it leverages the Daesan complex’s proximity to Chinese markets while mitigating the cost disadvantages Korean players face against Middle Eastern and North American rivals.


Lotte Chemical's domestic petrochemical complex in Daesan, South Chungcheong province (Courtesy of Lotte Chemical) | via The Korea Economic Daily, 7^th Feb 2022

Beyond Cost Savings: Portfolio Diversification and Innovation

While cost savings are vital, the merger’s strategic value lies in enabling portfolio diversification. The integrated entity can redirect capital from commoditized products toward high-value sectors, such as advanced materials and feedstock innovation, including exploration of crude-to-chemicals (TC2C) processes to bypass naphtha volatility. This shift aligns with Korea’s broader industrial policy, which now incentivizes specialization over volume-driven growth.


TC2C Block Flow Diagram - © portfolio planning PLUS

Industry-Wide Implications and Policy Support

The Lotte-Hyundai initiative transcends bilateral cooperation—it signals a necessary evolution for Korea’s petrochemical industry. As China’s overcapacity persists, further consolidation is inevitable. The Korea Chemical Industry Association, supported by government and consulting reports, advocates reducing generic capacity by as much as 50%, particularly in hubs like Daesan and Yeosu where overlapping facilities are most concentrated. Legislative proposals now offer tax incentives for coordinated output cuts, and the government is expected to use a “carrot and stick” approach to accelerate reform, rewarding active participants in restructuring while withholding support from those that resist.

Conclusion: A Template for Resilience in the Asian Petrochemical Sector

China’s ethylene oversupply has irrevocably altered the petrochemical landscape, making the Lotte-HD Hyundai integration a tactical imperative rather than an optional efficiency play. By transforming Daesan into a hub of optimized production and innovation, the partnership offers a template for Korean industry resilience. Success will depend on sustained commitment to high-value differentiation and policy-supported restructuring—a path that may define Asia’s chemical sector for decades.

#lotte #lottechemical #hyundai #hyundaichemical #daesan #korea #petrochemicalcomplex #naphthacracker #ethylene #oversupply #consolidation

KPIC entity and its production sites in Onsan and Ulsan have been added. Mass balance for both sites has been initialized.


#kpic #korea #onsan #ulsan #naphthacracker #kbr #lummus #scientificdesign

#steamcracker #naphthacracker #dow #germany #böhlen

Kawasaki refinery aerial view @ENEOS Corporation

ENEOS to Restructure Petrochemical Operations with Planned Shutdown of Kawasaki Ethylene Unit by 2027

Tokyo | Feb 26, 2025 -- ENEOS Corporation has announced that it will begin considering ways to optimize its petrochemical production and supply network, with the expectation that one of its two ethylene production units at the Kawasaki Refinery Plant in Kawasaki City, Kanagawa Prefecture will be shut down. This decision is part of ENEOS’s Third Medium-Term Management Plan, which aims to establish a solid earnings base and strengthen the competitiveness of its petroleum refining and marketing operations. Safe operations and a stable supply of energy remain key priorities for the company.

The Japanese petrochemical industry is currently facing a structural decline in domestic demand for its products, as well as intense international competition, particularly from other Asian countries. The construction of new petrochemical plants, especially in China, has led to an oversupply situation, forcing existing ethylene production units in Japan to operate at lower rates. As a result, the industry is under significant pressure.

The ethylene production unit scheduled for termination is located in the Ukishima South Area of the Kawasaki Refinery Plant, with the shutdown planned for the end of fiscal year 2027. The Kawasaki Refinery Plant currently operates two ethylene production units: the Ukishima North Area unit, which began operations in 1971 and has a production capacity of 540,000 tons per year, and the Ukishima South Area/Kawasaki Area unit, which started in 1970 and has a capacity of 448,000 tons per year.


#eneos #steamcracker #ethyleneplant #naphthacracker #kawasaki #refinery #plantclosure

#mitsubishi #chemical #ibaraki #kashima #steamcracker #naphthacracker #ethyleneplant

#lummus #steamcracker #liquidcracker #naphthacracker #osaka #japan #mitsui #mcm #ethylene #oct #propylene

TotalEnergies Manufacturing Site at the port of Antwerpen ©Belga

TotalEnergies closes one of its two steam crackers in Antwerp, 253 jobs disappear "without layoffs"

Antwerpen, 22 April 2025 -- TotalEnergies will close one of its two steam crackers in the port of Antwerp, a decision that will impact more than 250 jobs. No forced layoffs will be announced, according to the energy group.

By 2028, the chemical cluster in the port of Antwerp will lose one of its three steam crackers. TotalEnergies has chosen to shut down its oldest Naphtha Cracker (NC2). The reason is a concerning overcapacity in the petrochemical market. Although 253 positions are affected by this closure, management seeks to reassure: no forced departures are on the horizon.

“We assure every employee of the affected steam cracker that they will be able to continue their activity at our Antwerp site,” says Ann Veraverbeke, CEO, in an interview with Gazet van Antwerpen. “This transition is possible because, by early 2028, 270 of our employees in Antwerp will reach the legal retirement age. The 253 employees from the old steam cracker will be essential to fill this wave of departures.”

Ethylene overcapacity

NC2, a petrochemical facility that transforms hydrocarbons into basic molecules used in the chemical industry, was “historically dependent” on a contract with a user of the ethylene produced, who did not wish to renew this contract, the French oil and gas group specified.

The facility “will no longer have outlets for its ethylene production” and TotalEnergies will “focus on its newest steam cracker (NC3), whose ethylene production is entirely consumed by TotalEnergies’ units in Antwerp and Feluy,” it added.

2017 Revamp of Naphtha Cracker 3

As part of a project to upgrade its refining and chemicals platform in Antwerp, TotalEnergies had started up a new ethylene cracker that runs on ethane feedstock in July 2017, investing nearly $60 million to revamp its Naphtha Cracker 3 to run on the light feed and the adaption of the site’s terminal to enable the import of 200,000 t of ethane per year by ship from Norway. The revamp was done to optimize supply by providing flexibility for the cracker to use either ethane, butane or naphtha as feedstock, so that advantaged feedstock could therefore account for more than 50% total input.

#totalenergies #antwerp #belgium #petrochemicals #steamcracker #naphthacracker #plantclosure #ethylene

#idemitsu #chiba ##refining #petrochemicals #steamcracking #naphthacracker #refinery #oilrefinery #japan

#idemitsu #tokuyama #tokuyamacomplex #japan #naphth #steamcracker #naphthacracker