LG Chem, South Korea’s chemical industry heavyweight, is accelerating a sweeping transformation of its business in the face of mounting financial pressures and seismic shifts in the global petrochemical market. On April 8, 2026, the company took a decisive step by conducting a site inspection at its DaeSan plant with Kukdo Chemical and Samil PwC, signaling a concrete move toward selling a partial stake in its Bisphenol A (BPA) business unit and potentially forming a joint venture (JV). This isn’t just another asset shuffle—it’s part of a broader, urgent restructuring strategy designed to shore up profitability and future-proof the company’s portfolio.
According to Securities Daily, LG Chem’s BPA unit, long a cash cow with about 1.6 trillion KRW in annual sales and 300 billion KRW in EBITDA, has become a focal point for change. The BPA business, which produces a critical raw material for polycarbonate and epoxy resins used in everything from electronics to automotive parts, claims a commanding 42.5% share of the domestic market. Yet, the tides have turned. A glut of Chinese supply and aggressive low-cost competition from the Middle East have dragged down global BPA prices by 6.3% year-over-year, from 1.757 million KRW per ton in 2024 to 1.646 million KRW in 2025. These headwinds have battered profitability and forced LG Chem to rethink its approach.
The company’s first attempt to sell the BPA business dates back to July 2025, but a lack of eager buyers—spooked by sector volatility—put the plan on ice. Now, with Kukdo Chemical, its largest BPA customer and a major exporter of epoxy resins, stepping up for due diligence, the deal is back in play. The strategic logic is clear: Kukdo secures a stable supply of a vital input, while LG Chem offloads risk and gains a reliable partner for ongoing collaboration. Still, with the BPA unit valued at up to 2 trillion KRW and Kukdo’s annual sales hovering around 1.4 trillion KRW (and operating profit at just 53 billion KRW), a full acquisition seems out of reach. As one industry insider told Securities Daily, “It’s like a shrimp trying to swallow a whale.”
Instead, the companies are exploring creative alternatives. LG Chem is reportedly considering selling only a partial stake and establishing a JV, a move that would allow it to lighten its operational load and pocket much-needed cash, while Kukdo would gain secure access to BPA without overextending its finances. Whether Kukdo can attract external financial investors to help fund the deal or accept the JV’s terms remains the big question. “From Kukdo’s perspective, internalizing BPA supply is attractive, but taking full control is challenging given their financial structure,” the industry source added, predicting that “JV or other deal structures are likely.”
This is just the tip of the iceberg when it comes to LG Chem’s restructuring. As reported by EBN News Center, the company is pushing ahead with a series of bold moves to shed non-core and underperforming businesses. In recent months, LG Chem has shut down several low-margin production lines—like styrene monomer and ethylene glycol at DaeSan and Yeosu, and even ceased operations at its Naju alcohol facility. It’s also in the process of closing or integrating naphtha cracking plants in partnership with GS Caltex. On top of that, it’s divested subsidiaries such as its Chinese aesthetics unit and the Thai branch of Farm Hannong, and sold off water solutions and aesthetics divisions to private equity funds. The message is clear: LG Chem is betting its future on specialty chemicals and advanced materials, not commodity plastics.
Financial necessity is driving much of this urgency. According to a recent report by NICE Credit Rating, LG Group as a whole (including LG Chem) posted a combined 189.7 trillion KRW in 2025 sales and 5.8 trillion KRW in operating profit. However, aggressive investments have resulted in negative free cash flow for four straight years, with total borrowings ballooning from 46.8 trillion KRW in 2021 to 68.6 trillion KRW in 2025. The net debt to EBITDA ratio has worsened from 1.1 to 2.0, and LG Chem’s credit outlook is now officially “negative.”
Against this backdrop, LG Chem is trying to reassure investors by doubling down on shareholder returns. As Nate News reported, the company will pay a 2,000 KRW per share dividend for the 2025 fiscal year—double the previous year—even though it recorded a net loss of 977.1 billion KRW in 2025 and saw revenue slide to 45.9 trillion KRW. The move is part of a deliberate pivot away from aggressive expansion toward profitability and market confidence. LG Chem has also slashed its 2026 capital expenditure plan by over 1 trillion KRW, settling at 1.7 trillion KRW, and is in the process of selling down its stake in LG Energy Solution from 79.4% to about 70% over five years. The 9.4% stake earmarked for sale is valued at around 8.9 trillion KRW, providing a financial cushion for both dividends and future investments.
But there’s no denying the near-term challenges. According to Korea Economic Daily, the US-Iran conflict has sent crude prices soaring, with naphtha—a key feedstock for petrochemicals—jumping 72% in March 2026 alone. While LG Chem enjoyed a short-term boost in Q1 by selling products made from cheaper, pre-conflict naphtha, those cost advantages are fleeting. Analysts warn that Q2 will bring tighter margins as pricier raw materials work through the system and global competition intensifies. North American ethane crackers and Chinese coal chemical plants are ramping up, threatening to further pressure prices.
Still, some see a silver lining. High oil prices could accelerate electric vehicle adoption, boosting demand for batteries—a sector where LG Chem is increasingly pinning its hopes. Korea Duty Free News forecasts Q1 2026 sales of 12 trillion KRW and an operating loss of 129.4 billion KRW for LG Chem, with petrochemicals returning to profitability but advanced materials still in the red. Yet, the long-term outlook remains upbeat. As analysts point out, “LG Chem’s performance is now more influenced by battery sales growth than petrochemical challenges.” The company’s business model is shifting, with specialty chemicals, battery materials, and advanced electronics poised to drive future growth. CEO Kim Dong-chun summed up the company’s strategy at a recent shareholders’ meeting, stating, “The most important task is to restore profitability through fundamental competitiveness and rapidly transition to a future-oriented business portfolio.”
LG Chem’s transformation is far from over, but one thing’s clear: the company is moving fast to adapt to a new era. Whether through asset sales, JVs, or bold bets on advanced materials, it’s a story of reinvention—and it’s happening in real time.