'Business circumstances have been good in the first half of 2009. Many South Korean producers have made a lot of profit,' commented a source at Korea Petrochemical Industry Association (KPIA). 'Some companies like LG Chemical said they have made their highest first half profits historically. This is because of large recent demand from the China market.'
Petrochemicals demand has changed rapidly over the past year. The recovery has been just as sudden as the unexpected fall in demand for petrochemicals last year, which at one time seemed likely to cause plant closures among the worst affected companies.
The growth of petrochemicals production in the Middle East and China presents South Korean producers with a major challenge as a number of Korean companies also are planning to expand their own facilities in spite of existing over capacity in the market.
Among those planning to expand its production capacity is LG Chemical, one of South Korea's leading petrochemicals producers.
LG Chemical is carrying out a 100 000 tpy ethylene expansion scheme that will increase its ethylene production capacity to 1.76 million tpy in April 2010. LG Chemical will become South Korea's second largest ethylene producer after the expansion, overtaking Honam Petrochemical, which owns facilities capable of producing 1.75 million tpy of ethylene a year. The country's largest ethylene producer will remain Yeochun NCC Co Ltd, which owns facilities capable of producing 1.85 million tpy.
Meanwhile, more plant expansion projects are due for implementation at various locations. However, many companies have decided not to seek publicity for their new projects due to current fluctuating market conditions.
'Many South Korean companies are investing in China and the Middle East as a way to survive. In China it is up to downstream projects and the same in the Middle East. Even though these companies have big projects they do not announce them. That is their strategy.'
A leading producer
Major plant investments during the past decade have resulted in the country becoming one of the world's leading petrochemicals producers. Yearly production volumes have increased and traditional local downstream converting industry clients have moved production facilities offshore to lower cost countries in Asia. As a result South Korean petrochemical producers have switched from being domestic demand focused to become export orientated.
According to United Nations trade data, in 2007 South Korea was the world's fifth largest petrochemicals producer based on the country's ethylene capacity, narrowly trailing Saudi Arabia and Japan; and the world's sixth largest exporter of petrochemicals.
According to KPIA, in addition to South Korea's current 7.34 million tpy ethylene production capacity, the industry also is equipped to produce a further 15.09 million tpy of other basic petrochemicals including 5.07 million tpy of propylene, 1.11 tpy of butadiene, 4.12 million tpy of benzene, 1.86 million tpy of toluene and 2.92 million tpy of xylene.
Written by David Hayes, Hydrocarbon Engineering Contributing Editor.
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/23112009/an-overview-of-south-koreas-petrochemical-market-/