Yeosu National Industrial Complex, home to the world’s largest single-scale petrochemical cluster, was established in 1967 and operates primarily in refining, fertilizer, and petrochemical industries. (Photo courtesy of Jeollanam-do Province)
SEOUL, Aug. 18 (Korea Bizwire) — South Korea’s major petrochemical companies are grappling with a deepening industry downturn, as key players reported average plant utilization rates falling below break-even thresholds during the first half of 2025, according to corporate filings reviewed on August 17.
The average operating rates at leading firms—including Lotte Chemical, LG Chem, Kumho Petrochemical, and Hanwha Solutions—have declined significantly, reflecting persistent oversupply and shrinking global demand. Several facilities recorded average utilization rates in the 60 percent range, far below the 70 to 80 percent typically considered necessary to maintain profitability.
The Yeosu National Industrial Complex is the world’s largest single-site petrochemical hub, housing more than 280 companies. In Korea, a popular saying goes, “Don’t boast about your looks in Suncheon, your fists in Beolgyo, or your wealth in Yeosu”—a testament to Yeosu’s reputation as a symbol of economic prosperity in the southern part of the peninsula. (Photo courtesy of Jeollanam-do Province)
Utilization Rates Hit New Lows
Lotte Chemical’s naphtha cracking (NC) facilities, crucial for producing basic petrochemical feedstocks, operated at just 64.4% capacity in the first half, down sharply from 81% a year earlier. Utilization rates for its polypropylene (PP) and polyethylene (PE) plants also dropped to 72.8% and 71.7%, respectively—both down more than 15 percentage points from 2024 levels.
LG Chem fared slightly better, with its average utilization slipping 6.2 points to 71.8%. Kumho Petrochemical’s synthetic rubber and synthetic resin divisions also saw contractions, with average utilization falling to 66% and 57%, respectively.
Hanwha Solutions’ solar module division, Q Cells, saw its production utilization rate fall dramatically to 21%, down from 33% last year. Its advanced materials subsidiary, which manufactures automotive and solar materials, saw a modest drop from 71% to 67.7%.
The panoramic view of the Seosan Daesan Petrochemical Industrial Complex. (Image courtesy of Seosan city)
Workforce Shrinks Across Industry
The ongoing downturn has also impacted employment across the sector. Compared to year-end 2024, Lotte Chemical shed 209 workers, bringing its total to 4,555 by the second quarter. LG Chem reduced its workforce by 183 to 13,674, while Hanwha Solutions lost 120 employees.
Kumho Petrochemical was the lone outlier, adding 18 workers for a total of 1,597 as of the second quarter.
Black smoke pours out of a chemical factory chimney in the Daesan Petrochemical Complex in the central city of Seosan on Feb. 25, 2025, in this photo provided by a reader. (Image courtesy of Yonhap)
Structural Reforms on the Horizon
Industry analysts warn that the prolonged slump, exacerbated by global overcapacity, could soon force a wave of restructuring. “The domestic petrochemical sector is facing an extended downturn, and some level of restructuring—either government-led or through market mechanisms—appears inevitable,” one industry insider said.
The mounting challenges paint a grim picture for a sector once central to South Korea’s industrial engine. As profitability thresholds slip further out of reach, companies are expected to make difficult decisions about capital expenditures, staffing, and long-term strategic direction.
Ashley Song (ashley@koreabizwire.com)
