Chemical stocks were strong early on the 26th on news that restructuring in the petrochemical industry is gaining speed.
As of 9:43 a.m. that day, LOTTE Chemical was trading at 80,000 won on the Korea Exchange, up 5,500 won (7.38%) from the previous session. At the same time, Korea Petrochemical Ind. Co. rose 14,100 won (10.4%). LG CHEM (5.1%), SK Chemicals (3.95%), and Kumho Petrochemical (3.92%) were also strong.
According to the industry, LOTTE Chemical and HD Hyundai Chemical are discussing a plan to integrate the naphtha cracking centers (NCC) they have each operated in the Daesan petrochemical complex and run only the HD Hyundai Chemical plant (850,000 tons per year). The two companies are expected to finalize whether to consolidate the plants through voluntary restructuring talks this week.
In Aug., the government released a plan to voluntarily cut 2.7 million–3.7 million tons, equivalent to 18%–25% of total NCC capacity (14.7 million tons), to respond to a downturn caused by oversupply from China.
LOTTE Chemical and HD Hyundai Chemical are linked through an equity structure, which is seen to have allowed relatively swift coordination of interests. The two companies are co-located within the Daesan petrochemical complex, and HD Hyundai Chemical is owned 60% by HD Hyundai Oilbank and 40% by LOTTE Chemical.