"Daesan Project No. 1 Eases Uncertainty" Restructuring Plans No. 2 and No. 3 Also Accelerate

Practical Government Support Measures Recognized
Companies Plan to Submit Detailed Restructuring Proposals

The first restructuring plan in the petrochemical industry, the so-called "Daesan Project No. 1," received government approval on the 25th, raising expectations that the promotion of the No. 2 and No. 3 restructuring plans will also rapidly gain momentum. Since the government support measures for Daesan Project No. 1 have reflected many of the participating companies' demands, companies preparing for restructuring are planning to promptly submit their detailed plans.

Lotte Chemical Daesan Plant. Lotte Chemical

The industry views the approval of this restructuring plan as having removed uncertainty regarding government support. This is because the government has prepared practical support measures related to the various costs incurred during the business restructuring process.

In particular, it is considered highly significant that the latest support package was tailored specifically to the companies participating in Project No. 1 (HD Hyundai Chemical and Lotte Chemical). Observers interpret this as going beyond simple liquidity support, placing emphasis on easing the financial burden during the restructuring process and securing time for structural transition.

The government's combination of repayment deferrals, maintenance of financial terms, and capital-raising measures is being read as a signal that it aims not only to provide temporary funding, but also to pursue corporate financial stability and business normalization at the same time. Within the industry, there is a view that this is symbolically important because institutional finance has played the role of a "buffer" for companies with heavy debt burdens during their structural transition.

The industry expects that the approval of Project No. 1 will also provide momentum for restructuring plans by companies located in the Yeosu and Ulsan industrial complexes. A total of five business restructuring plans were submitted to the Ministry of Trade, Industry and Energy at the end of last year, and excluding Daesan Project No. 1, which has now been approved, four plans are awaiting the submission of detailed proposals. In the Yeosu industrial complex, Yeocheon NCC, a joint venture between Hanwha Solutions and DL Chemical, is preparing a detailed plan, and the establishment of a joint venture between LG Chem and GS Caltex is also being discussed. In Ulsan, SK Geocentric, Korea Petrochemical Ind. Co., Ltd., and S-Oil are working on related plans. An industry official said, "The overall direction itself is not that complicated, but the companies' interests are intertwined, making it difficult to bring everything together into a single plan," adding, "We expect that detailed restructuring plans will be submitted one after another in the near future."

However, there are also concerns that even if the financial burden is partially eased by this support, it could end up as a one-off measure unless structural issues such as sluggish global demand and oversupply are resolved. If a recovery in market conditions is delayed, the impact could be limited without fundamental improvement in the industry's underlying structure.

Um Chanwang, Vice Chairman of the Korea Chemical Industry Council, said, "To overcome the current structural crisis, effective government support is essential in addition to companies' own efforts," and added, "We ask that you continue to make strong policy efforts so that this approval can serve as an important catalyst for the further spread of restructuring going forward."