South Korea’s Lotte Chemical Corp. and HD Hyundai Group are looking to integrate parts of their naphtha cracking center (NCC) facilities within the Daesan Petrochemical Complex in South Chungcheong Province.

According to sources from the investment banking and business sectors on Wednesday, Lotte Chemical and HD Hyundai Group are in talks to integrate their respective petrochemical facilities in the Daesan complex.

The two companies have commissioned a major domestic accounting firm to assess the value of the petrochemical facility assets each company holds in the complex as well as the corporate value of their joint ventures, sources said.

An official from the accounting firm said, “Following the asset and corporate value evaluations, the companies are expected to proceed with asset optimization measures such as gradually shutting down certain facilities and reducing production volumes.”

As part of the negotiations, a scenario under discussion is that Lotte Chemical would transfer its facilities to HD Hyundai Chemical Co. while HD Hyundai Group would contribute additional capital to consolidate the facilities under a single corporate entity.

Regarding this matter, a Lotte Chemical official said that “nothing has been finalized internally at this point.”

Four companies - LG Chem Ltd., Lotte Chemical, Hanwha TotalEnergies Petrochemical Co., and HD Hyundai Chemical - currently operate NCCs in the Daesan complex.

Analysts viewed this restructuring initiative as a response to the prolonged slump in the petrochemical sector, which has heightened the risk of oversupply in NCC operations, as well as an effort to minimize inventory losses and enhance operational efficiency.

With government-led restructuring efforts particularly stalled due to political risks, they noted that companies have turned to private negotiations to push forward. Given the ongoing restructuring discussions in other petrochemical hubs like Ulsan and Yeosu on the country’s southern coast, analysts also expected that more corporate consolidations and mergers will happen moving forward.

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