Attendees included LG Chem, Hanwha Solutions, Lotte Chemical and Yeochun NCC, along with the Korea Plastics Industry Cooperative Federation, the Korea Federation of SMEs, and officials from the Ministry of Trade, Industry and Energy, the Ministry of SMEs and Startups, the Ministry of Economy and Finance, the Fair Trade Commission and the Financial Services Commission, according to political officials on March 19.
Petrochemical companies said spikes in feedstock prices such as naphtha and unstable supply were causing production disruptions and delivery delays, worsening profitability and adding to management strain.
Plastics manufacturers countered that large petrochemical suppliers have raised synthetic resin prices citing higher feedstock costs, leaving factories squeezed between rising material costs and sales prices that do not reflect those increases.
Industry officials said raw materials account for about 80% of plastics makers’ costs. Chae Jeong-mook, head of the Korea Plastics Industry Association, said raw materials make up about 83% of costs, leaving the sector directly exposed to oil price increases. He said prices have risen by about 200,000 won per ton since the war began and that there are signs of supply being cut off, adding, “The industry feels like it’s bleeding day by day.”
Chae called for stable supply and measures to prevent sharp short-term price spikes. He also urged adoption of a delivery price-linking system so increases in raw material costs can be reflected immediately in contract prices.
Petrochemical firms, while citing difficulties as naphtha cracking capacity (NCC) is being reduced, said they would do their best to stabilize the domestic supply chain.
Jeong Jong-eun, an executive director at LG Chem, pointed to what he described as a lack of government-level stockpiling and support for naphtha. “For crude oil or LNG, the state expands storage tanks through the national power network, but naphtha is not in that situation,” he said, adding the company was making every effort to secure supplies. He said the industry understands the concerns raised and plans to respond while working to stabilize domestic supply.
Kim Dong-wook, an executive director at Hanwha Solutions, said the company was trying to maintain production within its limits. He said inventories were already low because the market had been weak even before the situation escalated, making the impact appear quickly.
Kim Young-beon, an executive director at Lotte Chemical, said Lotte has substantial ethylene facilities and is heavily affected by overseas market conditions, adding it is proceeding as “model No. 1” in petrochemical restructuring. On synthetic resin pricing, he said the company was taking preemptive steps to stabilize the domestic market, including minimizing export volumes in March and April and expanding the domestic supply share from 45% to 90%.
Bae Yong-jae, a managing director at Yeochun NCC, said securing naphtha has become difficult due to the Strait of Hormuz blockade. He said the company had relied on that route for about 70% of its total volume and that prices have nearly doubled. He said the firm is maintaining minimum operating rates because naphtha is hard to obtain and called for broader discussions that include supply shortages, price pass-through and industry losses.
After the meeting shifted to a closed session, participants were reported to have discussed limiting the volume of petroleum products refiners export overseas. Democratic Party lawmaker Kim Nam-geun said naphtha is sourced through domestic production (47%) and imports (53%), and that with the government also reviewing export controls, participants discussed ways to secure supplies quickly.
Democratic Party lawmaker Min Byung-deok raised concerns about price increases occurring before higher crude prices were reflected in actual import costs. He said he asked the Fair Trade Commission and the Ministry of SMEs and Startups to monitor whether there was collusion or abuse of market power in the price-setting process and to submit their findings.
On financial support, Kim Nam-geun said about 20.3 trillion won in financing is being prepared in response to the Middle East situation, and the plastics and petrochemical industries are expected to be included.
On alternative naphtha sources, he said imports are being considered from India, Algeria and the United States, adding that Russia-related matters were mentioned only as a request and drawing a line on importing Russian supplies.
* This article has been translated by AI.
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