South Korean Petrochemical Firms to Cut NCC Capacity by Up to 3.7 Million Tons Amid Restructuring Efforts
South Korean petrochemical companies will voluntarily reduce their naphtha cracking center (NCC) capacity by 2.7 to 3.7 million tons (18-25%) as part of a major restructuring plan. Industry Minister Kim Jung-kwan announced the initiative, designed to tackle global oversupply. The government pledges support through tax incentives, R&D, and regulatory streamlining. All 16 major firms have submitted plans, with Lotte Chemical and HD Hyundai Chemical already forming a joint entity for NCC operations. The focus shifts to execution in 2025.
South Korea's petrochemical industry is undergoing a significant restructuring, with local firms committing to a voluntary reduction of their naphtha cracking center (NCC) capacity by 2.7 million to 3.7 million tons, representing 18-25 percent of the nation's total capacity. This move, announced by Industry Minister Kim Jung-kwan, aims to address a severe industry-wide crisis primarily caused by global oversupply. Sixteen major petrochemical companies have submitted their initial business restructuring plans, demonstrating a concerted effort to adapt to challenging market conditions.The government is actively supporting these self-rescue efforts, promising a comprehensive support package. This includes crucial tax incentives, increased research and development (R&D) funding, and the streamlining of regulations. Furthermore, the support will facilitate the industry's transition towards high-value and eco-friendly products, aligning with global sustainability trends. The restructuring is guided by three core principles: simultaneous transformation of major industrial complexes in Seosan, Ulsan, and Yeosu; robust self-rescue plans from companies; and a holistic government support framework.Lotte Chemical Corp. and HD Hyundai Chemical have already initiated their restructuring by agreeing to spin off Lotte Chemical's NCC operations at the Daesan petrochemical complex into a new joint entity. Minister Kim urged other companies to swiftly finalize their plans, emphasizing that 2025 will be a critical year for execution. This collective effort is deemed essential for the long-term success and competitiveness of South Korea's petrochemical sector in the face of evolving global market dynamics.
