This article was posted on the ChosunBiz MoneyMove (MM) site at 5:32 p.m. Nov. 3, 2025.
Hyosung Chemical sold 200 billion won worth of platinum catalysts to its parent company Hyosung. It first sold the bulk of the holdings and then leased back only the required amount, arranging a kind of "sale and leaseback" structure.
Trading precious metals in a sale-and-leaseback manner like this is uncommon. Supply is limited, so prices can swing sharply depending on geopolitical variables at production sites, creating a risk that one side will bear losses. Nevertheless, the industry interprets Hyosung Group's decision to have an intra-group platinum sale as part of the parent company's full support to improve Hyosung Chemical's financial structure.
According to investment banking industry sources, Hyosung said on Oct. 31 that it would purchase platinum used as catalysts at Hyosung Chemical's Yongyeon plant up to 77,157 troy ounces (toz). Hyosung is the largest shareholder of Hyosung Chemical with about a 33% equity stake.
Hyosung also decided to lend the purchased platinum to Hyosung Chemical in the form of a lease. It will lease up to 20 billion won worth of platinum for one year. For Hyosung Chemical, securitizing expensive precious metal assets to secure cash while maintaining production stability is advantageous. It is interpreted as a strategy to improve efficiency by freeing assets from long-term immobilization and reducing working capital burdens.
Platinum catalysts play a key role in polypropylene and dehydrogenation processes and are assets that are regenerated and recovered for repeated use. Corporations that hold large amounts of catalysts long term, like Hyosung Chemical, can have excessive working capital tied up, and a recent slowdown in the chemical market combined with lower asset turnover can worsen financial conditions.
Specifically, for Hyosung Chemical, disposing of platinum through this transaction reduces inventories and immediately secures several tens of billions of won in cash. This produces a decrease in total assets on the separate financial statements and is likely to improve asset profitability indicators such as return on assets (ROA) in the short term.
ROA is net income divided by total assets. Hyosung Chemical posted annual net losses of more than 300 billion won through last year, and its total assets reach about 2.7 trillion won. ROA has been negative every year.
If Hyosung Chemical leases platinum via a sale-and-leaseback, inventories decrease while right-of-use assets increase. However, while inventories decrease by 200 billion won, the immediately increasing right-of-use assets amount to only 20 billion won, because annual catalyst usage is less than 20 billion won.
From Hyosung's perspective, it records the precious metals as assets and earns rental income by leasing them to Hyosung Chemical. Instead of each company separately holding and managing expensive metals like platinum, the parent company will consolidate management. It streamlines operations by keeping expensive assets in the head office vault and lending them out as needed rather than scattering them across units.
On a consolidated basis, Hyosung's revenues and expenses will offset, so the practical impact is expected to be limited. However, by supplying liquidity to a subsidiary, the parent inevitably assumes the fundamental risk of precious metal price volatility. Platinum is a highly volatile asset depending on global economic conditions, demand for automotive catalysts and political risks in mining countries. Hyosung would have to accept valuation losses if prices fall compared with the acquisition time.
The purchase price was calculated by applying the highest platinum futures price on the New York Mercantile Exchange in the past month (US$1,770 per troy ounce) within the expected purchase quantity. It added a caveat that unit price and exchange rate changes could alter the terms at the time of future sales contracts, but there could be disputes later over the fairness of the internal transaction price.
Platinum prices have risen sharply. On the New York Mercantile Exchange, the January 2026 platinum futures price hovered around US$1,200 per troy ounce until midyear but surged after September to surpass the US$1,600 level. It reached a yearly high in mid-October. Over six months it has risen more than 60%.
An investment banking industry official said, "To avoid escalating into issues of unfair support for subsidiaries or private gain, the actual lease terms and payment structure must be close to market prices."
Hyosung has been supporting Hyosung Chemical materially and financially to improve its financial structure. In addition to purchasing platinum, Hyosung agreed to provide 100 billion won to Hyosung Chemical via convertible bonds (CB), and it also provided credit enhancement when Hyosung Chemical borrowed 200 billion won from Newstar HS First Co.