Hanwha Total Energy has suspended the LLDPE production unit at its Daesan complex.

Main reasons to shutdown: oversupply from Chinese petrochemicals, sharp drop in exports to China

The background to the company's decision is the oversupply caused by the extensive launch of petrochemical capacity in China and the Middle East, and the resulting deterioration in profitability. According to data from Jinlianchuang, a Chinese petrochemical information agency, the average domestic LLDPE price in China in 2025 was 7,484 yuan/ton, down 11.5% from 8,453 yuan/ton in 2024; during the same period, South Korea's LLDPE exports to China plummeted from 74,382 tons to 41,568 tons, a drop of 42.8%. The increase in China's domestic self-sufficiency rate has put simultaneous pressure on the export volume and sales price of South Korean items in China.

Limited impact on domestic supply and demand

Hanwha TotalEnergies assessed that this shutdown would have a limited impact on South Korea's domestic supply and demand. The facility has an annual production capacity of 125,000 tons, accounting to only 4.2% of South Korea's total LLDPE production capacity (2.958 million tons). In terms of production capacity ranking, LG Chem ranks first with 1.1 million tons (37.2%), followed by DL Chemical with 530,000 tons (17.9%), Hanwha Solutions with 425,000 tons (14.4%), Lotte Chemical with 310,000 tons (10.5%), SSNC with 288,000 tons (9.7%), and SK Geo Centric with 180,000 tons (6.1%). Hanwha TotalEnergies is the smallest among South Korea's seven LLDPE producers in terms of production capacity.

S-OIL's new plant intensifies competition

The Ulsan Shaheen project being cutting-edge by S-OIL also influenced this decision — the project will have an LLDPE supply capacity of 880,000 tons per year, about 7 times Hanwha TotalEnergies' existing capacity. Once the facility is put into operation, it will have become South Korea's second-largest LLDPE supplier, second only to LG Chem. The entry of a significant quantity of new supply will further increase production pressure on existing manufacturers.

Strategic shift to high value-added items

Hanwha TotalEnergies stated that it will reshape its business portfolio with a focus on high value-added items. In the first half of this year, the company has commercialized polypropylene (PP) materials to insulation of medium-voltage subsurface distribution network cables; completed pilot verification of commercial-scale catalyst performance in linear alpha-olefin (LAO) process research; and also completed the research and field consumption of high-density polyethylene (HDPE) materials to substantial-diameter pipelines.

A relevant person from Hanwha TotalEnergies said: "During the process of adjusting the product portfolio to enhance business competitiveness, we decided to shut down the LLDPE plant. The company is assisting existing customers in securing inventory and finding alternative supply channels to prevent supply disruptions."