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LG Chem is considering selling its naphtha cracking centre (NCC) in South Korea for an estimated USD 2.3 billion. This move is part of the company's efforts to strengthen ne growth drivers and higher-value-added products to compete with Chinese rivals. However, the final decision is yet to be made, according to their statement.

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Naphtha is a vital material for producing plastics, and rubber, which is derived from crude oil. The NCC is a plant that uses high-temperature cracking to produce petrochemical feedstocks like ethylene and propylene from naphtha. LG Chem has been producing these materials at the Yeosu NCC Complex 2, covering 82 acres, but the plant has been shut down since a maintenance break in April.

Until recently, Korean players dominated the petrochemical market, but this has changed due to the aggressive inroads of Chinese peers. Due to the global economic downturn and China's entry into the market, the naphtha cracking market has been in a prolonged slowdown.

LG Chem has not yet resumed operations at the facility of Yeosu NCC Complex 2. It employs 300 people and can produce 800,000 tons of ethylene and 480,000 tons of propylene annually.

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The poor performance of the plant is attributed to high fuel prices, oversupply, and weak demand, especially in China, which is the largest importer of local petrochemical products.

According to Procurement Resource, LG Chem is currently considering the sale ofselling one of its Naphtha Cracking plants located in Yeosu. The company has been experiencing losses due to a decline in demand and an increase in fuel prices. The rise in fuel prices has caused a negative impact on production since crude oil is necessary for the manufacturing of petrochemical products.