South Korea’s Lotte Chemical suspends key Yeosu operations amid financial struggles

Lotte Chemical Corporation has announced the indefinite partial suspension of operations at its Yeosu petrochemical complex, citing continued financial pressures and unfavourable market conditions. The suspension impacts Plant 2, which includes PET, ethylene glycol (EG), and ethylene oxide derivatives (EOA).

The decision marks the latest step in the company's efforts to mitigate losses in a highly competitive global market. The EG and EOA facilities, with annual production capacities of 400,000 tons and 230,000 tons, respectively, ceased operations on 03 December 2024.

Lotte Chemical has been grappling with oversupply and price competition, particularly from Chinese producers. Earlier in 2024, the company idled its PET units at both Yeosu and Ulsan, which together had a combined annual capacity of 520,000 tons. These facilities remain offline, with no timeline provided for a potential restart.

This move is part of a broader strategy to mitigate financial losses. In the third quarter of 2024 alone, the company reported an operating loss of 413.6 billion won, bringing total operating losses for the year to 660 billion won. Lotte Chemical has implemented cost-cutting measures across its Yeosu and Daesan facilities to address these challenges.

The future of Plant 2 remains unclear. While the company has not disclosed plans for restarting or divesting the facility, the reassignment of approximately 70 employees previously working at the plant suggests an extended shutdown.

Lotte Chemical continues to operate several other facilities at the Yeosu site, including a 1.23 million tons/year naphtha cracker, a 600,000 tons/year PP plant, and a 630,000 tons/year HDPE plant. However, their operational status has not been disclosed, leaving questions about the broader impact of the company’s restructuring efforts.

Written by: Muhammad Hafiz