South Korean Petrochemical Firms Accelerate NCC Operations Streamlining Amid Industry Crisis
Major South Korean petrochemical companies like Lotte Chemical and HD Hyundai Oilbank are advancing plans to consolidate and reduce naphtha cracking center (NCC) output to address oversupply challenges driven by China and the Middle East. These efforts include asset transfers, joint ventures, consultancy engagements, and shifts in feedstock usage, all aimed at improving efficiency and financial stability ahead of government deadlines.
In response to a challenging oversupply-driven downturn in the petrochemical sector, South Korean firms are taking coordinated actions to streamline operations of their naphtha cracking centers (NCCs). Lotte Chemical plans to transfer its NCC facility in Seosan to its joint venture with HD Hyundai Oilbank, facilitating output cuts and deficit reduction. LG Chem and GS Caltex are collaborating with Bain & Company to explore joint NCC operations and capacity reductions in Yeosu, while SK Geo Centric, S-Oil, and Korea Petrochemical Ind. Co. have engaged Boston Consulting Group for strategic advice on output control. SK Geo Centric also aims to enhance efficiency by switching NCC feedstock from naphtha to ethane, reducing production costs. S-Oil pursues efficiency gains via a thermal crude-to-chemicals process in its Shaheen project, emphasizing energy savings and carbon emission cuts. The government mandates credible self-rescue plans as prerequisites for regulatory relief and financial aid, with Industry Minister Kim Jung-kwan enforcing strict measures against firms failing to comply. Legislative support through special laws is progressing through the National Assembly to facilitate industry restructuring. These combined efforts represent a concerted push by industry players and authorities to overcome structural challenges and restore competitiveness in South Korea's petrochemical industry.
