South Korea's Lishui No.1 Project Landing Petrochemical Industry Integration Speeds Up Capacity

On March 20, South Korea's Ministry of Industry, Trade and Resources officially disclosed that South Korea's head ethylene producers YNCC, Lotte Chemical, Hanwha and DL Chemical have jointly submitted the final plan for business restructuring of "Lishui No.1 Project" to promote the structural optimization and adjustment of South Korea's petrochemical industry. At present, the plan is in the review stage of relevant departments.

The core action of this reorganization is to split the naphtha cracking unit (NCC) with an annual production capacity of 1.23 million tons at Lotte Chemical Lishui Base, and complete the integration with YNCC to form a new integrated operating entity. As a joint venture between DL Chemical and Hanwha, YNCC currently operates 3 sets of cracking units in Lishui with a total annual production capacity of 2.28 million tons. The new entity will be 1/3 by each of the three companies, sharing the capital investment and operational risks required for the restructuring.

According to the plan, YNCC will permanently shut down the idle No. 2 (with an annual capacity of 910000 tons) and No. 3 (with an annual capacity of 470000 tons) units, retain only the No. 1 unit with better efficiency (with an annual capacity of 900000 tons), and integrate Lotte Chemical Lishui cracking unit. At the same time, the three companies will incorporate the production capacity of ethylene downstream products such as polyethylene and petroleum resin into the new main body to ensure stable income.

Industry analysis pointed out that the integration will promote the transformation of South Korea's petrochemical industry to centralization and scale, while the fluctuation of naphtha supply caused by geopolitical risks has further accelerated the structural upgrading process of South Korea's petrochemical industry.

This integration is the core initiative of South Korea's petrochemical de-capacity policy launched in August 2025, with the policy goal of reducing ethylene production capacity by 2.7 million -3.7 million tons per year. As South Korea's largest ethylene producer, YNCC will reduce its production capacity by about 60% after shutting down two units. Jointly integrating Lishui naphtha cracking business with Lotte Chemical, the core purpose is to resolve overcapacity and improve overall operational efficiency. Prior to this, Lotte Chemical has invested US $0.545 billion million with Hyundai Chemical in the Dashan joint venture project to promote related restructuring work.

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