Petrochem firms downsize in crisis

Korea’s petrochemical makers are pushing to downsize their business operations to contend with a sharp fall in demand amid a global economic downturn, industry sources said yesterday.

Local petrochemical companies, including LG Chem Ltd. and SK Chemicals Co., are trying to streamline their operations and sell their subsidiaries to create synergy, the sources said.

A sharp fall in demand for petrochemicals in China has created hard times for local firms since July,¡± said Kim Jong-sung, an official at the Korea Petrochemical Industry Association.

The deepening global economic downturn has also had a negative impact on petrochemical firms.¡±

LG Chem, the nation¡¯s leading chemical producer, decided last month to spin off its industrial material division by the end of March this year.

The decision is subject to approval by shareholders at a meeting scheduled for Jan. 23.

In December, SK Chemical, the petrochemical unit of SK Group, sold its subsidiary SK Petrochemical to SK Energy Co., another unit of the group, for 4.1 billion won ($3.1 million).

SK Chemical also sold its two polyurethane plants in Korea and China to U.S. chemical company Lubrizol Corp.

DC Chemical Co., Korea's leading polysilicon manufacturer, sold its 66.75 percent stake in U.S. based Columbian Chemicals Co. to One Equity Partners, a private equity fund.

In addition, Honam Petrochemical Corp., a unit of the Korean family-run conglomerate Lotte Group, merged with its wholly owned unit Lotte Daesan Petrochemical Corp. on Jan. 1.

Source: JoongAng Daily