Finance Minister Urges Accelerated Restructuring in South Korea's Petrochemical Industry
South Korea's Finance Minister Koo Yun-cheol called on petrochemical firms to expedite their restructuring efforts before the year-end deadline. The government and 10 major companies agreed in August to reduce naphtha cracking capacity by up to 3.7 million tons to address a prolonged slump from global oversupply and intensified competition. The minister emphasized the urgency to complete plans amid a challenging industry landscape.
Finance Minister Koo Yun-cheol urged struggling South Korean petrochemical companies to hasten their self-restructuring initiatives, stressing that the 'golden time' to do so would end by year-end. This follows a government directive requiring firms to submit detailed restructuring plans by then as part of efforts to revitalize an industry battered by a global supply glut and weakened demand. In August, an agreement was signed between the government and 10 major petrochemical firms aiming collectively to reduce naphtha cracking center capacity by up to 3.7 million tons. South Korea is one of the largest naphtha importers, with naphtha used as a key feedstock for producing plastics in automobiles, electronics, and textiles. The domestic sector faces significant pressure due to excess capacity, especially as China and the Middle East expand petrochemical production, worsening global supply-demand imbalances. The minister’s call highlights the critical timing for companies to undertake all-out restructuring efforts to secure financial support and improve competitiveness amid sustained market challenges.
