The South Korean government is exploring stockpiling strategies for petrochemical raw materials and products, including naphtha, in response to potential supply disruptions due to instability in the Middle East. The plan aims to establish a permanent response system that encompasses stockpiling targets, scale, and the roles of both public and private sectors.
According to the Public Procurement Service on July 29, the Ministry of Trade, Industry and Energy has recently commissioned a study on "Stabilizing the Supply Chain of the Petrochemical Industry." This initiative is seen as a follow-up to the government's announcement of its "Economic Growth Strategy for the Second Half of 2026" on July 14.
During that announcement, the government highlighted vulnerabilities in the domestic supply chain exposed by the ongoing conflict in the Middle East and stated its intention to examine the necessity and operational strategies for naphtha stockpiling in the latter half of this year.
In March, amid growing concerns over naphtha supply due to the Middle East conflict, the government designated naphtha as a critical economic security item and implemented emergency measures, including export restrictions and bans on hoarding, as well as support for price differences in imports.
There are expectations that the government may shift from temporary supply measures to a permanent system for managing the petrochemical supply chain, given the strategic importance of the petrochemical industry within the overall industrial supply chain.
The focus will likely be on stockpiling raw materials and products, as well as inventory management strategies. The Ministry plans to identify necessary stockpiling items through research and assess the required stockpiling days and quantities for each item. It will also evaluate the costs associated with stockpiling and the effectiveness of related policies to propose appropriate stockpiling levels.
Additionally, the government will consider how to secure and operate public stockpiling facilities. It will review the inventory management practices of private companies, appropriate levels of mandatory stockpiling, and what support the government should provide. The research will also encompass any necessary legislative amendments related to the introduction of a stockpiling system.
Beyond stockpiling, the government is looking into diversifying supply sources and stabilizing domestic production. It plans to design a system for activating emergency supply adjustments during crises and establish public-private cooperation frameworks along with support measures for the private sector.
The study will also assess the structure and industrial significance of the domestic petrochemical supply chain. It will analyze the supply system for petrochemical raw materials and products, such as naphtha, and evaluate the risks associated with supply disruptions, as well as the current level of crisis response. The government intends to investigate supply and crisis management cases from major countries to derive applicable policy measures for South Korea.
Meanwhile, amid rising concerns over supply chain instability due to recent tensions in the Middle East, the domestic petrochemical industry has secured naphtha supplies above last year's levels through next month. The inventory levels in the petrochemical sector remain stable. However, to prepare for a prolonged situation, the government plans to continue implementing supply stabilization measures and explore strategies to secure necessary quantities after September.
* This article has been translated by AI.
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