South Korea petrochemical firms on track to cut up to 3.7 MM tons of output
South Korea's petrochemical firms are on track to cut up to 3.7 million metric tons of output under a voluntary plan to overhaul the oversupplied sector and improve flagging profit margins, the industry minister said on Monday.
Minister Kim Jung-kwan said 16 companies, including major naphtha crackers, had submitted blueprints by Friday ahead of a year-end deadline as requested by authorities, which would be the basis of a quick path to restructure the industry.
President Lee Jae Myung, who took office after a snap election in June, pledged during his campaign to pursue tax support for mergers and acquisitions in the petrochemical industry, and to exempt companies from antitrust regulations to allow more coordination of production and operations.
A final plan that is to be approved by the government would entitle the companies to tax and regulatory incentives and research and development support, the industry ministry has said.
The cuts expected to be between 2.7 million and 3.7 million metric tons per year would be equivalent to about 25% of the country's overall capacity, including a new project that had been set to begin next year, according to Reuters calculations.
Kim was speaking at a meeting with company officials on Monday. South Korea's leading petrochemical companies include LG Chem, which is the top producer of ethylene and propylene, as well as GS Caltex, Lotte Chemical, Hanwha TotalEnergies, S-Oil and HD Hyundai Chemical.
There have also been discussions on how to restructure the operations of Yeochun NCC Co (YNCC), the country's third-largest ethylene producer, which is a joint venture between DL Chemical and Hanwha Solutions.
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