LG Chem (051910.KS), Korea's largest chemical company and a major battery-materials maker, will close the adhesive production line at its Naju plant in South Jeolla Province this year, relocating the 6,000-tons-per-year line to its Daesan petrochemical complex in South Chungcheong Province, according to reports on July 20 from Yonhap News, Korea's national news agency, and Electronic Times (ETNews), a Korean industry daily. The move leaves just one of the site's original four production lines running — a plasticizer line — capping a multi-year drawdown that ETNews reported was mapped out two years ago as part of restructuring amid the petrochemical downturn.
For a global investor, the first question is whether this is a material capacity cut or a symbolic mothballing. The numbers point firmly to the latter.
A rounding error in tonnage, a signal in trajectory
The 6,000-tons adhesive line is de minimis against LG Chem's scale: the company's petrochemical division alone booked revenue of 4.47 trillion won ($3.3 billion) in the first quarter of 2026 (Seoul Economic Daily, April 30, 2026). What matters here is not the tonnage but the trajectory of the Naju site itself.
Naju has been shed in steps. Acrylic production was halted in December 2023, and octanol and alcohol output was wound down from a December 1, 2024 announcement, with roughly 100 workers reassigned to the Yeosu and Daesan complexes and "no layoffs anticipated," an LG Chem official said at the time (Businesskorea). The stated rationale for consolidating Naju — high logistics costs shipping product to port for export — underscores that geographically stranded, low-margin lines are first to go (Businesskorea). Headcount at Naju has fallen from about 270 to roughly 110 over two to three years and is expected to drop to 80–90 once the adhesive line moves, ETNews reported. A once multi-product site is being pared to a single plasticizer line.
Why it matters: a microcosm of Korea's petrochemical retreat
The Naju step-down mirrors how Korea's petrochemical majors are backing out of commodity products under pressure from Chinese oversupply and weak demand, which ETNews cited as the backdrop. Group-wide, LG Chem swung to an operating loss of 49.7 billion won ($36 million) in the first quarter of 2026 from a 437.7 billion won ($320 million) operating profit a year earlier, on revenue of 12.25 trillion won ($9 billion) (Seoul Economic Daily, April 30, 2026). That swing reflects weakness across the group, not petrochemicals alone — the chemical division itself stayed narrowly profitable in the quarter, though, as detailed below, that profit leaned on one-off items.
The company has been trimming across its footprint: it shut its Yeosu No. 2 plant in March 2026 amid a naphtha supply crunch, per Seoul Economic Daily, and has moved to exit base-chemical styrene monomer. Seen against that backdrop, the Naju consolidation is less a standalone event than the latest small increment in a broad, deliberate exit from low-margin bulk chemistry.
The open question
The next confirmation point is LG Chem's second-quarter 2026 earnings. The petrochemical division posted a 164.8 billion won ($120 million) operating profit in the first quarter, but management attributed that to inventory lag from rising raw-material prices after the Middle East conflict and a one-time gain from European anti-dumping tariff refunds (Seoul Economic Daily). Whether the division can hold black ink without those one-off items will show whether the operational retreat is stabilizing margins or merely slowing the bleed. Also worth watching is LG Chem's exploration of a sale of its BPA (bisphenol A) business, with due diligence reported alongside Kukdo Chemical, a Korean epoxy-resin maker that consumes BPA as a primary raw material (Seoul Economic Daily, April 8, 2026).
This article is journalism, not investment advice. LineVest is not a registered investment adviser. Figures are drawn from the cited primary reports; won-to-dollar conversions use an approximate rate of 1 USD = 1,370 KRW unless a source specified otherwise.
