SK Innovation to divest overseas petrochemical assets as restructuring drive gains pace

SK Innovation Co., the energy and materials subsidiary of South Korea’s SK Group, plans to divest petrochemical businesses in the United States and France as it accelerates restructuring to secure fresh capital, according to investment banking sources.

The divestment package reportedly includes the ethylene acrylic acid (EAA) and polyvinylidene chloride (PVDC) businesses acquired from Dow Chemical in 2017, along with the functional polyolefin unit purchased from Arkema in 2019. SK plans to market the assets as a bundle to international petrochemical players.

The move underscores a strategic retreat from SK’s earlier ambitions to build packaging materials into a next-generation growth engine through its subsidiary SK Geo Centric Co. The polyolefin segment, once buoyed by pandemic-driven demand for food and beverage packaging, has since fallen into the red, weighed down by oversupply and fierce competition from Chinese producers. The unit posted operating losses of 14.4 billion won in 2023 and 20.5 billion won in 2024.

Industry sources noted that SK Geo’s EAA and PVDC operations also enjoyed pandemic-era growth but have recently faced similar margin pressures, compounded by the post-merger integration challenges of managing overseas facilities and workforce integration.

In a parallel move, SK Geo is negotiating the sale of its 860,000 tons/year naphtha cracking centre in Ulsan to Korea Petrochemical Ind. Co. Analysts said the asset sales align with broader industry realignment, as authorities urge domestic petrochemical firms to cut up to 25% of national naphtha cracking capacity under a sweeping restructuring framework.

Written: Farid Muzaffar