Naphtha Shortage Halts Factories, Puts Consumer Prices on Red Alert

Due to repercussions from the Middle East war, disruptions in the supply of naphtha, the main raw material for petrochemical products, are impacting the domestic petrochemical industry. Naphtha prices have nearly doubled since the immediate aftermath of the conflict, and the surge in raw material costs is now threatening consumer prices.

The average operating rate at the Yeosu Industrial Complex, South Korea's largest petrochemical hub, has plummeted to 60%. LG Chem suspended operations at its Yeosu Plant 2 since late last month, while Lotte Chemical has moved up its major maintenance schedule by approximately three weeks.

The government is moving to secure alternative naphtha supply lines and strengthen support for the industry. It has secured 27,000 tons of Russian naphtha, previously held offshore due to U.S. sanctions, and plans to allocate a new budget of 460 billion won for naphtha supply and demand support, subsidizing 50% of the increased import costs after the Middle East situation.