LG Chem seeks to shut down PA plant in Yeosu

By Kim Hyun-bin

LG Chem is considering shutting down its phthalic anhydride (PA) production plant in Yeosu as the company's product lost price competitiveness due to China drastically increasing production and flooding the market in recent years.

According to the company, the plant which produces 50,000 tons of PA a year is under review to be withdrawn. The company gave notice to related plant departments and the union earlier this month.

This is the company's only PA plant in and outside of Korea and the closing will totally withdraw LG from the PA business.

PA is a raw material used to develop plasticizers which are used to increase flexibility in plastic.

The company cited environmental factors and lack of long-term competitiveness for shuttering its PA production line.

“We are not closing the entire factory, just the PA sector, which takes over a single line of production and accounts for producing 50,000 tons of PA annually. Mergers and withdrawal of the production lines are conducted regularly,” an LG Chem official said. Currently, the PA line is in operation.

Industry watchers believe the rapid increase of PA production by Chinese firms has drastically reduced profitability. In addition, a recent LG Chem India plant gas leak and an explosion at its Daesan factory have raised safety issues, which led to a review of the withdrawal.

The staff at the PA plant are scheduled to be transferred to other production plants. The PA business started to decline in 2018 as Chinese companies drastically increased production of the material forcing a significant price drop.