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According to a report released by Sinochem New Network on November 27, the South Korean Central Bank stated that the restructuring of the country’s petrochemical industry will exert downward pressure on economic growth in the short term. However, in the long run, as global demand recovers, companies can enhance their competitiveness through investment in research and development, thereby laying the foundation for sustainable growth. The Bank of Korea stated that as a result of the restructuring, South Korea’s industrial output is set to decline by up to 6.7 trillion won by 2026, which will have a cascading effect on related downstream industries. Data shows that as of 2023, the petrochemical industry accounted for 5.6% of South Korea’s total manufacturing output and 7.2% of its exports, while contributing 2.2% of the country’s employment opportunities. However, South Korea’s petrochemical industry is highly dependent on exports, making it vulnerable to price fluctuations and changes in demand. Since 2022, affected by factors such as global overcapacity and weak demand, the industry has continued to operate at a loss. The overall industry operating margin dropped sharply from around 12% in 2021 to 2.9% in 2022, and further fell to -0.1% in 2024. South Korea’s petrochemical industry also faces various structural challenges: its export structure is highly concentrated in the Chinese market and on commodity products, resulting in weak resilience to risks; its production facilities rely primarily on oil-based processes, while American companies use ethane as a raw material and Chinese companies employ coal-based systems, giving South Korean companies no advantage in terms of raw material costs; moreover, industry trends such as green transformation and digitalization increase cost pressures. Korean petrochemical companies rely entirely on imported oil as raw material for their cracking units; fluctuations in oil prices directly affect production costs, further increasing the operational pressures on these industries. The Middle East is **accelerating the development of crude oil-to-chemicals (COTC) projects as well as industries related to green electricity and electric vehicles, thereby intensifying market competition through diversification. To this end, the South Korean government has been promoting voluntary restructuring among enterprises since August 2025, with key measures including reducing the production capacity of petrochemical facilities (especially cracking units). The Bank of Korea emphasized: “Currently, major competitors such as China are accelerating the restructuring of their petrochemical industries. Although such restructurings result in short-term losses in terms of growth, we must seize this golden period for structural transformation in order to enhance the competitiveness of our industry.” ” The Bank of Korea’s analysis shows that the decline in industry profitability over the past few years has left South Korea’s major petrochemical companies without the capacity for new investments; by reducing operating costs through restructuring, these companies can focus their resources on upgrading production facilities and developing products with high added value. The report predicts that \"if companies actively carry out R&D activities, increasing their R&D spending by about 3.5% each year over the next three years, the short-term growth losses resulting from structural reorganizations will be fully offset by 2029, with even higher returns achieved.\" ” To date, Lotte Chemical and Hyundai HD Chemical have submitted their restructuring plans, aiming to integrate the naphtha cracking units at the Dae-san Industrial Complex; other companies are required to submit their own restructuring plans by the end of 2025.