The initiative, unveiled by Economy Minister Choi Sang-mok, aims to bolster the sector's competitiveness by easing regulations and providing financial incentives. The move comes as major domestic players like LG Chem, Lotte Chemical, and Hanwha Solution have reported significant losses in their petrochemical divisions.
“The enhancement of industrial competitiveness is an essential task that cannot be halted under any circumstances,” Choi said on Dec. 1 at a ministerial meeting held at Hanwha Ocean Co.’s R&D campus.
To facilitate consolidation and restructuring, the government will relax regulations under a special corporate revitalization act. This will allow companies to streamline mergers and acquisitions through board approval rather than shareholder meetings. Additionally, tax payments on stock exchange gains between companies can be deferred until shares are sold.
The government is also considering additional support measures, including tax benefits, policy financing, and tariff reductions. A three-year strategy is being developed to stabilize supply chains in critical industries such as semiconductors and batteries.
In a bid to protect domestic industries, the government plans to impose anti-dumping duties on steel imports, particularly from Vietnam and China.
The challenges facing South Korea’s petrochemical industry are exacerbated by China’s aggressive expansion and overcapacity. Chinese producers have been flooding the global market with lower-priced products, putting significant pressure on South Korean companies.
Lotte Chemical's financial woes have intensified, with the company failing to meet some of its bond covenant requirements in November. Its parent company, Lotte Group, pledged its landmark skyscraper as collateral. Meanwhile, Moody’s downgraded LG Chem’s credit rating to ‘Baa1’ from ‘A3’ with a negative outlook on Wednesday.
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