Lotte and LG Chem to Slash 30% Capacity: The South Korea Ethylene Capacity Cut 2026 Plan

The golden age of South Korean petrochemical expansion is meeting a cold reality. Lotte Chemical and LG Chem, two of the nation's industrial titans, are leading a group of 16 manufacturers in a massive 30% reduction of domestic ethylene production capacity. It's a drastic move triggered by a persistent global supply glut and intensifying government pressure to fix bleeding balance sheets.

South Korea Ethylene Capacity Cut 2026: A Forced Structural Shift

According to the South Korean Ministry of Trade, Industry and Resources, the industry can no longer ignore the overproduction crisis. For years, low-cost Chinese rivals have flooded the market, squeezing margins to the point where production often results in a net loss. This 30% cutback represents a definitive pivot from volume-based growth to strategic survival.

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Pivoting Toward High-Value Materials

The strategy isn't just about shrinking; it's about evolving. Lotte Chemical is reportedly shedding struggling units to focus on high-growth sectors like specialty chemicals and materials for green technology. As similar pressures hit petrochemical makers in Japan, South Korea's proactive restructuring is seen as a necessary step to maintain a competitive edge in advanced materials.