Chemical Sector Hit by Oversupply from China
Tasked with Business Restructuring and New Business Expansion
Lee Hoon-ki, Chief Executive Officer of the Chemical Division at Lotte Group. Photo by Lotte
Lotte Chemical, struggling with poor performance, has pulled out the card of personnel reshuffle. Kim Gyo-hyun, Vice Chairman and General Representative of the Chemical Division who led Lotte Chemical for six years, stepped down, and Lee Hun-ki, Head of Management Innovation Office at Lotte Holdings and CEO of Lotte Healthcare, will lead the Chemical Division. He will be entrusted with important tasks such as expanding new businesses like battery materials and reorganizing the business focusing on high value-added and eco-friendly products.
On the 6th, Lotte Group conducted the 2024 regular executive appointments, appointing President Lee Hun-ki as CEO of Lotte Chemical and General Representative of the Chemical Division of Lotte Group.
Chemicals, along with distribution, are the central pillars of Lotte Group. However, in the past one to two years, the global recession and aggressive expansion in China have plunged the chemical business into a slump. Lotte Chemical recorded losses for five consecutive quarters but turned a profit in the third quarter of this year. There is a high possibility of operating losses for two consecutive years.
The new CEO is well acquainted with the chemical industry. He majored in chemical engineering at Seoul National University and joined the group’s Planning and Coordination Office in 1990. From 2010 to 2013, he served as CEO of Lotte Chemical Titan, and in 2014, he was head of the planning division at Lotte Chemical. Attention is focused on how CEO Lee can normalize Lotte Chemical’s poor performance. The basic materials sector, which suffers from oversupply caused by China, accounts for more than 50% of Lotte Chemical’s sales.
The most likely choice is to increase the production ratio of high value-added eco-friendly products. The recycled plastic business could be a lifeline. Lotte Chemical previously announced plans to invest 100 billion KRW in its Ulsan Plant 2 to establish a chemical recycling PET production line with an annual capacity of 110,000 tons by 2024, and to increase it to 340,000 tons by 2030.
The new CEO, who held the helm of Lotte Group’s new business direction, will also take on the challenge of expanding new businesses such as batteries and hydrogen. He served as CEO of Lotte Rental in 2019 and has been Head of ESG (Environment, Social, Governance) Management Innovation Office at Lotte Holdings since 2020, overseeing the discovery of new businesses for the group. Lotte Group’s chemical affiliates are currently building a value chain of core electric vehicle battery materials, including cathode foil, copper foil, electrolyte organic solvents, and separator materials, aiming to secure competitiveness by preoccupying major markets such as the U.S. and Europe.
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