DL Chemical, a co-controlling shareholder of Yeochun NCC, Korea's No. 3 ethylene producer by capacity, said it will fulfill its responsibility as management, including the shutdown of Yeochun NCC's No. 3 plant with a capacity of 900,000 tons (t). DL Chemical said it will do its best to restructure the scale of downstream businesses on the premise of expanding the proportion of cost compensation and reducing ethylene capacity.
On the 15th, DL Chemical disclosed that it had signed a feedstock supply contract with Yeochun NCC and at the same time announced its stance on the direction of cutting NCC capacity and on structural innovation at Yeochun NCC. Regarding the results of an external consulting review on feedstock prices, DL Chemical said it was "a starting point that squarely faces reality," but added that "stronger safeguards and a joint-responsibility structure are needed at a level that reassures creditors and the government."
DL Chemical and Hanwha Solutions, which each hold 50% equity in Yeochun NCC, negotiated feedstock prices for about a year after a long-term supply contract expired in 2019. While it is meaningful that the two companies have established agreed standards this time, DL Chemical's position is that stronger supplementary measures are needed.
DL Chemical said, "The emergence of a reference point does not mean structural risks have been resolved," and emphasized that "from the perspective of a shareholder and feedstock procurer, the expansion of NCC cost compensation needs to be reflected in Yeochun NCC's structural reform plan." There is no guarantee that self-rescue efforts will be achieved 100%, so shareholders should work to reflect market conditions and risks.
According to DL Chemical's analysis, Yeochun NCC's 2025 results have deteriorated by more than 300 billion won from the initial management plan reported to shareholders (operating profit at the BEP level). Profit and loss have been worsening rapidly toward the fourth quarter since the second capital increase.
Citing the ongoing China-driven supply risks and Japan's survival cases through cracker output cuts and downstream upgrading, DL Chemical said, "Rather than economies of scale, both upstream and downstream must find a way forward through solid NCC operations centered on profitability," adding, "We fully agree with the government's direction."
At the same time, DL Chemical presented the view that the No. 1 plant, with ethylene capacity of 900,000 tons, should be shut down. DL Chemical said, "To support the government's goal of restructuring the petrochemical industry and to strengthen Yeochun NCC's profitability, it is worth considering raising profits by shutting down one plant with a capacity of 900,000 tons rather than the No. 3 plant with a capacity of 500,000 tons, and then adjusting supply volume." Yeochun NCC operates Plants 1, 2, and 3 in Yeosu. Plants 1 and 2 have ethylene capacity of 900,000 tons, and Plant 3 has capacity of 500,000 tons.
DL Chemical plans to phase out downstream product lines with low profitability and structurally weak competitiveness, scrap some facilities, or redeploy them for high value-added production. It also plans to concentrate research and development (R&D) capabilities on high value-added products to secure profitability even with reduced capacity.
A DL Chemical official said, "In the era after NCC reductions, upgrading the downstream is not a choice but a condition for survival," adding, "This is the government's restructuring policy and a task that the entire Yeosu industrial complex must consider together."
The company also reaffirmed its willingness to take responsibility for market-based financing as a shareholder and to ensure employment stability. DL Chemical said it will play a responsible role in market-based financing needed during structural innovation, prioritize internal redeployment for surplus personnel due to capacity cuts, and secure employment stability to the greatest extent possible even when additional personnel arise.
DL Chemical's position is that even after all self-rescue efforts—expanding cost compensation, reducing NCC capacity, restructuring downstream, fulfilling responsibility for market-based financing, and succession of surplus personnel—if market conditions worsen more than expected and Yeochun NCC faces a liquidity problem, it will not rule out additional financial support as a shareholder.
DL Chemical Vice Chairman Kim Jong-hyun said, "We will not shift responsibility to others under the name of restructuring," adding, "We will be a partner that shares responsibility for cost compensation, business reorganization, employment, and finance." He added, "We will take one step further until the industry, the local community, and creditors can be reassured."