Indefinite Production Halt! 1.1‑million‑ton‑per‑annum Ethylene Unit Closed, Associated Butadiene Unit Taken Off‑Stream Simultaneously
On September 3, Lotte Chemical’s naphtha steam cracker (NCC) at the Daesan Industrial Complex in South Korea entered indefinite shutdown, with its supporting butadiene extraction unit ceasing operation at the same time. The facility features a designed annual ethylene capacity of 1.1 million tonnes. This shutdown marks the transition of South Korea’s “Daesan‑No.1” petrochemical industrial restructuring project from the approval phase to actual implementation.
According to overseas industry media reports, under the restructuring blueprint, Lotte Chemical will divest assets at its Daesan plant and integrate with HD Hyundai Chemical to form a joint‑venture entity named H&L Advanced. Lotte Chemical and HD Hyundai Oilbank will each hold a 50 % stake in the new firm to jointly operate petrochemical assets within the Daesan site. Lotte Chemical’s existing naphtha cracker will be shut down, while HD Hyundai Chemical’s 850 000‑ton‑per‑annum naphtha cracker on the same site will keep running. The move is intended to optimize the plant’s overall production structure and ease widespread oversupply and margin pressure across South Korea’s petrochemical sector.
This restructuring represents South Korea petrochemical industry’s first‑ever implemented case of industrial‑structure adjustment. The project obtained approval from the Ministry of Trade, Industry and Energy (MOTIE) of South Korea in February 2026. The South Korean government has rolled out fiscal and tax incentives totalling 2.1 trillion Korean won to phase out low‑efficiency commodity petrochemical capacities and steer the industry toward high‑value‑added product development산업통상자…. During the review process, the Korea Fair Trade Commission (KFTC) imposed a five‑year antitrust restriction covering pricing and supply for LDPE (low‑density polyethylene) and EVA (ethylene‑vinyl‑acetate copolymer), mitigating competitive risks stemming from higher market concentration.
The permanent removal of 1.1 million tonnes of annual ethylene capacity will cut total ethylene output capacity at the Daesan Industrial Complex by roughly 23 %, reshaping the supply landscape for ethylene, propylene and butadiene across Northeast Asia. Industry analysts note that the indefinite unit shutdown will partly alleviate supply glut pressure in Asia’s ethylene market. Nevertheless, commodity flow shifts as well as import‑export trade movements require close ongoing monitoring.
Per the master plan, the newly‑established joint venture will not only decommission inefficient crackers but also streamline and consolidate redundant, under‑performing downstream production facilities inside the industrial complex. The JV will ramp‑up investment and expand footprint for high‑value‑added chemical products to lift the overall competitiveness of the Daesan petrochemical complex. South Korea’s petrochemical sector also intends to push forward capacity restructuring at other petrochemical parks such as Ulsan, and continue delivering national petrochemical capacity‑optimization targets.
Post time: Sep-11-2026