Yeosu Complex Accelerates Restructuring of Vinyl, Plastic Operations in Face of China's Offensive

In response to China’s low-price offensive, the government has approved a final restructuring plan focused on downsizing and merging factories at the Yeosu Industrial Complex, the nation’s representative petrochemical cluster. Under this decision, two of Yeochon NCC’s three plants will close, and the remaining one will be merged with the adjacent Lotte Chemical plant. Annual production capacity will be reduced from 2.28 million tons to 900,000 tons. Combined with production cuts at the Daesan Industrial Complex in Chungcheongnam-do last February, this fulfills 67% of the government’s reduction target.

China is building large-scale naphtha cracking centers (NCCs) in its eastern regions and has resumed the export of basic feedstocks with raw material support from Russia. According to data from the Korea International Trade Association, Korea imported 43,885 tons of ethylene from China in April, 48,064 tons in May, and 21,347 tons in June. Oil-rich Middle Eastern nations, such as Saudi Arabia, are also entering the basic feedstock market by building their own NCCs. An official from the Ministry of Trade, Industry and Energy (MOTIE) revealed that NCC operating rates remain below 80%, failing to reach the break-even point of 85%.

MOTIE held a meeting on the 22nd with representatives from four companies: Yeochon NCC, Lotte Chemical, Hanwha Solution, and DL Chemical. Vice Minister Moon Shin-hak stated that voluntary restructuring would serve as an important milestone from an industrial policy perspective. The ministry announced plans to establish a comprehensive measure to strengthen the competitiveness of the chemical industry ecosystem in the second half of this year.