Lotte Chemical's factory in Ulsan / Courtesy of Lotte Chemical

Lotte Chemical is considering redeploying some of its 500 workers from its polyethylene terephthalate (PET) factory in Ulsan to other plants, following a decline in the Ulsan factory's output due to the oversupply of petrochemical products from China, according to industry officials, Wednesday.

This came after the petrochemical unit of Lotte Group began to restructure its operations here and overseas to cope with the industry downturn.

Although the chemical firm said nothing has been decided regarding the redeployment, Lotte Chemical CEO Lee Hun-ki has indicated the company's intention to downsize investments in conventional petrochemical products.

"Considering the deteriorating competitiveness in our petrochemical business, we are considering various strategic options," he told reporters after the annual general meeting of shareholders last month.

In December, Lotte Chemical decided to complete its 77 billion won ($56 million) investment in a PET recycling facility in Ulsan by the end of 2027, three years later than initially planned, citing growing economic uncertainties.

In addition, the company resumed efforts to sell Lotte Chemical Pakistan Limited (LCPL) after failing twice in its attempts to sell the Pakistani subsidiary. It is also said to be trying to unload its factory in Malaysia, which produces ethylene, polyethylene and polypropylene.

LG Chem, which has redeployed its workforce after suspending some of its factories' operations, has been carrying out a voluntary redundancy program as a follow-up to the sale of its IT film business to a Chinese company last year.

The chemical unit of LG Group denied any correlation between the program and the recent slowdown in the petrochemical industry. However, the company is reportedly negotiating with Kuwait Petroleum Corp. to split off its second naphtha cracking center in Yeosu, South Jeolla Province, and sell part of its stake in the facility to the Middle Eastern country's state-owned company.

SK Innovation is also pushing ahead with streamlining its petrochemical business.

"Earlier this year, our company began to review our business portfolios to enhance the competitiveness of our affiliates," SK Innovation CEO Park Sang-kyu told employees during a recent workshop.

There is speculation that the oil refining unit of SK Group may sell part of its stake in SK Geo Centric, a petrochemical subsidiary that has shifted its focus to recycling waste plastic.

Industry officials expect the escalating geopolitical tensions in the Middle East to weigh further on the Korean petrochemical sector, as a rise in international oil prices tends to hike costs in the production of naphtha, a raw material of petrochemical products.

In response, the government and companies agreed earlier this month to launch a council to discuss ways to strengthen the competitiveness of the Korean petrochemical industry. The trade ministry also plans to talk with the finance ministry to continue exempting naphtha from tariffs.