LG Chem (051910.KS) is resuming its restructuring efforts for its bisphenol A (BPA) business unit, a commodity petrochemical product, including potential stake sales.
According to industry sources on Wednesday, LG Chem conducted due diligence at its Daesan plant in South Chungcheong Province together with Kukdo Chemical (007690.KS) and Samil PricewaterhouseCoopers for strategic collaboration related to its BPA business unit.
LG Chem is reportedly reviewing various business restructuring options, including selling a partial stake in its BPA business unit to establish a joint venture (JV).
BPA is a commodity petrochemical product used as a key raw material for high-performance engineering plastics such as polycarbonate (PC) and epoxy resins. LG Chem produces 165,000 tons of BPA annually at its Daesan plant, and Kukdo Chemical is a major customer that uses BPA as a primary raw material.
LG Chem is accelerating its business restructuring in response to declining profitability in its commodity petrochemical segment. The company has been pursuing a sale of its BPA business since last year. Beyond BPA, LG Chem is gradually divesting non-core and low-margin businesses, particularly in its commodity product lines.
The company divested businesses and assets worth approximately 4 trillion won ($2.9 billion) in the fourth quarter of last year alone. During Q4 last year, LG Chem sold its Chinese aesthetics subsidiary LG Jianshenkeji, and completed stake sales in Farmhannong's Thailand subsidiary, its water solutions business unit, and Tail Chemical.
Pressure to restructure commodity petrochemical operations is intensifying due to naphtha supply disruptions caused by prolonged Middle East tensions. Since late last month, LG Chem has suspended operations at its No. 2 naphtha cracking center (NCC) with 800,000 tons of annual capacity at the Yeosu industrial complex, operating only the No. 1 plant. The company is making every effort to minimize operational gaps by deploying 27,000 tons of Russian naphtha that arrived in Korea late last month to its Daesan plant.