LG Chem mulls absorbing LG Daesan

26-Jul-05

In 2003, LG Chem with Honam Petrochemical Corp. jointly acquired the cash-strapped Hyundai Petrochemical, South Korea's No.2 ethylene maker at the time. This deal was estimated at US$1.49 billion. LG Chem renamed its share of Hyundai's production assets LG Daesan Petrochemical. For some time now, LG Chem has been considering merging with LG Daesan Petrochemical and expanding output capacity at the unit to help ease shortage of basic products including ethylene. The two firms currently have some overlapping product groups including styrene monomer (SM), low density polyethylene (LDPE) and high density polyethylene (HDPE). LG Daesan has an annual capacity of 500,000 tpa of ethylene. In late June, LG Daesan had trimmed its Daesan naphtha cracker expansion plan by 30% to 210,000 tpa due to weaker-than-expected demand in 2007 In a bid to increase the profitability of its chemicals operations by the end of the year, LG Chem, South Korea's leading chemical firm, has unveiled a few plans. LG Chem Ltd. plans to absorb LG Daesan Petrochemical Ltd., its wholly-owned subsidiary, as well as expand LG Daesan's naphtha cracking center (NCC) to produce an additional 200,000 tpa of ethylene. This expansion will take LG Chem's annual productivity to 1.51 million tons of ethylene.