South Korea’s YNCC secures $220 million lifeline, averts default risk
The lifeline marks a notable policy shift for DL Chemical, which had previously resisted Hanwha’s push for fresh capital.
South Korea’s Yeochun NCC Co. (YNCC), the nation’s third-largest ethylene producer, has secured 300 billion won ($220 million) in emergency loans from shareholders DL Chemical Co. and Hanwha Solutions Corp., averting an imminent default as the global petrochemical downturn deepens.
The lifeline marks a notable policy shift for DL Chemical, which had previously resisted Hanwha’s push for fresh capital. YNCC has been mired in losses in recent years, squeezed by a flood of low-cost supply from China and the Middle East that has crushed margins across Asia. Analysts warn the new financing offers only a temporary reprieve unless paired with aggressive restructuring to confront chronic oversupply and muted demand.
Liquidity pressures have already forced operational cutbacks. On 8 August, the company idled its smallest naphtha cracker — the No. 3 unit in Yeosu, with annual ethylene capacity of 465,000 tons. Market participants had feared that without shareholder support, YNCC could struggle to sustain output from its two remaining crackers, raising alarms over regional supply stability.
The bailout comes as South Korea’s petrochemical sector faces one of its most challenging periods in decades. Margins have been hammered by relentless capacity expansion over the past decade, particularly in China, where new plants have flooded the market with competitively priced material. The oversupply has left even established producers struggling to operate profitably.
Seoul is now preparing an industry-wide restructuring blueprint aimed at restoring competitiveness and rationalising capacity. Whether such measures can offset entrenched supply overhangs and revive margins remains uncertain — but for YNCC, the clock is already ticking, and $220 million may only stretch so far.
Written: Farid Muzaffar