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Image courtesy of Yeochun NCC |
[Alpha Biz= Kim Jisun] Yeochun NCC, a major petrochemical producer located in the Yeosu National Industrial Complex, is facing a liquidity crisis that has sparked concerns across the industry and in nearby communities. Market watchers fear the company’s troubles could have a broader ripple effect.
According to industry sources on August 10, Yeochun NCC is on the brink of default due to prolonged losses and a deteriorating financial structure caused by a downturn in the petrochemical sector. The company is reportedly unable to cover a KRW 39 billion (USD 29 million) operating fund payment due on August 21.
Established in April 1999 as a 50-50 joint venture between Hanwha Group and DL Group, Yeochun NCC is South Korea’s third-largest ethylene producer. The company had historically earned between KRW 300 billion and KRW 1 trillion annually depending on market conditions. However, since the early 2020s, it has suffered persistent losses due to a supply glut from China. In June, the firm requested an additional KRW 300 billion in capital from its shareholders, and on August 8, it suspended operations at its Yeosu Plant 3.
Differences between the two major shareholders remain unresolved. Hanwha Solutions, formerly Hanwha Chemical, has taken the position that the company should be rescued, approving a KRW 150 billion loan at its board meeting last month. DL Chemical, formerly Daelim Industrial, argues that oversupply from China will continue and has suggested pursuing corporate normalization through measures such as a formal workout process rather than direct financial support.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
