Hanwha TotalEnergies is accelerating the rationalization of its petrochemical product production facilities as their profitability continues to decline.
According to industry sources on the 20th, Hanwha TotalEnergies recently halted its linear low-density polyethylene (LLDPE) production line at its Daejeon plant in Chungnam Province. The company has actually removed residual materials and sealed the facility with nitrogen for preservation, indicating a measure aimed at long-term suspension of operations. This marks 32 years since initial production began in 1994. LLDPE is a general-purpose synthetic resin used in plastic bags and packaging films. Previously, Hanwha TotalEnergies had also suspended operations at Plant 1 of its styrene monomer (SM) plants, which serve as raw materials for synthetic resins.
The background of this decision is cited as oversupply caused by large-scale facility expansions in China and the Middle East, leading to deteriorating profitability. According to Chinese petrochemical information provider Jinlanchuang, the average price of LLDPE in China last year was 7,484 yuan per ton, down 11.5% from the previous year (8,453 yuan). During the same period, South Korea's exports of LLDPE to China also plummeted by 42.8%, from 74,382 tons to 41,568 tons. As China expanded its domestic production, both the export volume of Korean products and local product prices decreased simultaneously, worsening sales conditions.
Hanwha TotalEnergies is reportedly judging that the impact on domestic supply and demand will be limited despite the production halt. The current annual LLDPE production capacity is 125,000 tons, accounting for only 4.2% of the total domestic production capacity (2.958 million tons). By company, LG Chem has the largest share with 1.1 million tons (37.2%), followed by DL Chemical at 530,000 tons (17.9%), Hanwha Solutions at 425,000 tons (14.4%), Lotte Chemical at 310,000 tons (10.5%), SSNC at 288,000 tons (9.7%), and SK Geo Centric at 180,000 tons (6.1%). Hanwha TotalEnergies has the smallest production capacity among the seven domestic producers.
S-Oil's plan to operate new facilities also influenced Hanwha TotalEnergies' decision. S-Oil plans to supply LLDPE with an annual capacity of 880,000 tons through its Ulsan Shahran project. This is approximately seven times larger than Hanwha TotalEnergies' production capacity. Once the facility becomes operational, it will immediately rise to become the second-largest producer in South Korea, following LG Chem. With the entry of large-scale new supply into the market, existing companies are expected to face increased production burdens.
For now, Hanwha TotalEnergies is set to restructure its business portfolio with a focus on high value-added products. In the first half of this year, it commercialized polypropylene (PP) material for insulation in medium-voltage underground distribution cables. It has also completed pilot verification of catalyst performance applicable at commercial scale in the development of linear alpha olefin (LAO) manufacturing processes. The company is diversifying its high value-added product lineup by developing and applying high-density polyethylene (HDPE) material for Daegu Kyung pipes on-site.
A Hanwha TotalEnergies official stated, "We decided to halt operations at the LLDPE plant as part of adjusting our product portfolio to strengthen business competitiveness," adding, "We are supporting existing customers in securing inventory and establishing alternative supply lines to ensure there are no disruptions."
in INDUSTRY
