Last year, South Korean petrochemical companies saw increased losses

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　　According to a report released recently by South Korea’s credit rating agency NICE Investor Services, South Korea’s major petrochemical companies are expected to incur total operating losses of 1.5 trillion won in 2025, a figure that is significantly higher than the 1.1 trillion won in losses recorded in 2024. 　　The report indicates that although the industry suffered losses in both 2024 and 2025, the sharp drop in product price differences in the fourth quarter of 2025, inventory write-down losses, and various one-time costs all contributed to an even greater overall loss for that year. NICE stated, \"In the fourth quarter of 2025, the industry suffered heavy losses due to a sharp decline in price margins for its core products, losses on inventory valuations, and other one-time expenses, which ultimately led to a significantly larger overall loss for the year.\" ”　　This statistics covers 8 companies: LG Chem (excluding LG New Energy), Lotte Chemical, Korea Petrochemical Industry, Hanwha Solutions, SKC, Kookdo Chemical, Kumho Petrochemical, and Hyosung Chemical. Faced with the ongoing downturn in the petrochemical industry, several companies incurred large one-time expenses in 2025 to advance their long-term restructuring efforts. For example, LG Chem recorded a one-time cost of 1.9 trillion won in the fourth quarter, which was related to \"expected adjustments and strategic transformations in its petrochemical, battery, and materials businesses.\" The company suffered an operating loss of 413 billion won that quarter, resulting in a net loss of 1.57 trillion won for the whole year. During the same period, Lotte Chemical recorded an asset impairment loss of around 1 trillion won on goodwill and tangible assets due to \"reduced profit forecasts in a continuously weak economic environment.\" 　　In terms of product performance, the olefin sector in South Korea continued to face an oversupply situation with a slow recovery in demand, resulting in a significant drop in price spreads in the fourth quarter of 2025. The aromatics sector saw improvements in the second half of 2025, with p-xylene (PX) returning above the break-even point. 　　NICE emphasizes that although the restructuring of South Korea’s petrochemical industry has begun, it will take a considerable amount of time before tangible results can be seen. Faced with challenges such as overcapacity and weak demand, the South Korean government has set targets to reduce ethylene production by 2.7–3.7 million tons per year. NICE points out that substantial adjustments such as plant shutdowns, integrated consolidation, and pipeline relocations still require a long time to be implemented due to complex negotiation processes and implementation challenges.