28 March 2006 01:45 [Source: ICIS news]
SAN ANTONIO, Texas (ICIS news)--Honam Petrochemical plans to absorb its subsidiaries KP Chemical and Lotte Daesan in 2008 in order to consolidate operations and save costs, sources close to the company said on Monday.
Units whose operations overlap are likely to be merged as a result, and the move will help the company come up with a clearer growth strategy, added one source at the 31st International Petrochemical Conference.
“Right now, they are basically operating as three separate companies. Given that they are part of the same company anyway, it makes sense to officially roll KP Chemical and Lotte Daesan into the fold," a second source said.
Honam, a subsidiary of the Lotte group, would have a total ethylene capacity of 1.42m tonne/year and propylene capacity of 735,000 tonne/year after absorbing Lotte Daesan. KP Chemical does not produce olefins, and is a major producer of terephthalic acid (1.1m tonne/year).
It would will still have a smaller ethylene capacity than Yeochun NCC (1.445m tonne/year). LG Chem is the most profitable South Korean petrochemical producer.
The move comes after LG Chem absorbed LG Daesan Petrochemicals in January. LG Chem and Honam jointly acquired Hyundai Petrochemical in 2003, with LG Chem taking over one cracker complex and renaming it LG Daesan and Honam taking over the other and renaming it Lotte Daesan. Honam bought KP Chemical in July 2004.
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