LG Chem, the country's largest petrochemical firm, said Monday it would suspend operations at its No. 2 naphtha cracking center (NCC) plant in Yeosu, which has an annual ethylene production capacity of 800,000 tons. The company will keep its larger No. 1 plant, with a capacity of 1.2 million tons per year, running to maintain baseline output.
Yeochun NCC, a joint venture between Hanwha Solutions and DL Chemical, also halted its olefin conversion unit (OCU) and some downstream operations. Lotte Chemical is advancing maintenance shutdowns and reallocating supplies to sustain core production. The moves reflect mounting strain as feedstock costs surge and supply routes remain disrupted.
The move is aimed at conserving limited naphtha stocks by curtailing production of lower-demand petrochemical products while keeping core ethylene output intact.
Yeochun NCC is struggling to maintain its operating rate at about 60 percent as a drop below 50 percent would force a complete shutdown due to safety risks.
Naphtha prices have surged since the blockade of the Strait of Hormuz cut off imports from the United Arab Emirates, Qatar and Kuwait.
Domestic naphtha prices reached $1,068 per ton as of March 18, roughly double the level at the start of the year. Global benchmark naphtha prices climbed to $873 per ton on Monday from about $480 at the beginning of the year, according to Trading Economics.
The spike has effectively eliminated refining margins between naphtha and ethylene, meaning petrochemical producers are incurring losses for every ton of output.
The shutdowns have raised concerns over downstream supply disruptions. Ethylene and propylene are essential feedstocks for plastics and vinyl, while butadiene is used in synthetic rubber for tires and paraxylene serves as a base material for polyester textiles.
With the industry facing cascading risks, the government moved to shore up supplies and contain the fallout.
He added that there would be no major disruption to domestic crude oil supply in April.
Speaking at the National Press Club in Australia's capital, International Energy Agency chief Fatih Birol said Monday compared the current energy crisis to those of the 1970s and the impact of Russia's 2022 invasion of Ukraine.
"This crisis as things stand is now two oil crises and one gas crash put all together," Birol said.
The industry ministry plans to redirect domestically produced naphtha from exports to the domestic market by coordinating with refiners, which account for about 55 percent of the country's naphtha supply.
Yang said emergency supply adjustment orders could delay potential plant shutdowns until late April or May, and that the government would seek supplementary budget allocations to support the effort.
He added that the refiners were securing alternative volumes by rerouting shipments around the Strait of Hormuz.
Of 24 million barrels to be sourced from the UAE, about 4 million barrels are set to arrive in late March and early April, with the remaining 18 million barrels expected to begin arriving from early to mid-April.
The government is also considering imports of Russian crude oil, made possible by a temporary easing of U.S. sanctions, but remains cautious due to concerns over quality, financial settlement risks and potential secondary sanctions.
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