A “Petrochemical Industry Business Restructuring CEO Meeting” is being held on December 22 at the Chamber Lounge of the Korea Chamber of Commerce and Industry in Jung-gu, Seoul. (Yonhap)
SEOUL, Dec. 23 (Korea Bizwire) — The South Korean government said it expects domestic petrochemical producers to cut as much as 3.7 million tons of naphtha cracking capacity, a key goal of a sweeping industry restructuring drive aimed at restoring competitiveness in an oversupplied global market.
After reviewing restructuring plans submitted by major producers, the Ministry of Trade, Industry and Energy said the industry appears capable of meeting its voluntary target of reducing capacity by between 2.7 million and 3.7 million tons — roughly 18 to 25 percent of the nation’s total naphtha cracking capacity of 14.7 million tons.
At a meeting in Seoul on Monday, Industry Minister Kim Jung-kwan met with chief executives from 12 petrochemical companies, including LG Chem, Lotte Chemical and SK Geo Centric, to discuss implementation of the restructuring plans and the government’s support measures. All 16 major petrochemical firms operating in the Yeosu, Daesan and Ulsan industrial complexes submitted their plans by the government’s December deadline.
Mr. Kim praised what he called decisive action by the private sector and pledged swift support through a package of financial assistance, tax incentives, research and development funding and regulatory relief for companies whose plans are approved.
Once firms submit final restructuring proposals, the government will review them through a formal screening committee and announce tailored support packages simultaneously, officials said.
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)
The government is also stepping up efforts to help the industry move toward higher value-added and environmentally friendly products. On Monday, the ministry will launch a “Chemical Industry Innovation Alliance,” a collaboration platform bringing together large manufacturers, small and midsize suppliers, universities and research institutes to support advanced materials development and green transformation. R&D demand from companies participating in restructuring will be prioritized, Mr. Kim said.
Discussions at Sunday’s meeting also covered the so-called Daesan No. 1 Project, a joint restructuring initiative by HD Hyundai and Lotte Chemical, which is undergoing preliminary review and is expected to receive approval as early as January. Financial institutions are preparing support measures based on ongoing due diligence.
Calling 2025 a decisive year for execution, Mr. Kim said the government and industry would act “as one team” to ensure the success of the restructuring, while pledging additional measures in the first half of next year to support local suppliers and employment affected by capacity cuts.
“Restructuring is not a sprint but a marathon,” he said, urging companies to see the process through to the end.
M. H. Lee (mhlee@koreabizwire.com)
