Posted On 12.17.18, In TCG/TCGR
, by Admin
South Korea’s petrochemical majors reaffirmed capital investment plans worth nearly 14.5 trillion won ($13 billion) in total over the next five years to ready for the next expansion cycle after an anticipated downturn next year. Petrochemical exports are estimated to gain 14.6% this year. The growth is expected to stop at 0.4% next year, according to a report by the Korea Institute for Industrial Economics & Trade.
In line with its capex outline, LG Chem Ltd. signed an agreement with Yeosu City to invest 2.6 trillion won to build a new facility, which will include a naphtha cracking center and manufacturing plant for polypropylene (PP), polyethylene (PE), and other high value-added products, at its base in Yeosu, South Jeolla Province. Caltex Corp., the country’s second-largest refiner, will also invest 2.7 trillion won by 2021 to build an olefins manufacturing plant or a mixed feed cracker at its Yeosu manufacturing complex. The company already signed an agreement with South Jeolla provincial government to add an olefins plant near its second refinery in August.
S-Oil Corp., the third-largest refiner and wholly owned by Saudi Aramco, is prepping a project worth 5 trillion won to construct a mixed feed cracker and olefin downstream facilities near its Onsan factory in the southeastern city of Ulsan. Hyundai Chemical Co., a joint venture between Hyundai Oilbank Co. and Lotte Chemical Corp., is readying a 2.7 trillion won investment to build a heavy feed petrochemical complex at Hyundai Oilbank’s manufacturing plant in Daesan, South Chungcheong Province. The new facility will produce ethylene, PE, and propylene. Source: Pulse, 12/4/2018.
TCGR Note: Of interest is the Korea Institute for Industrial Economics & Trade forecast that next year’s growth will drop from +14.6% in 2018 to +0.4% in 2019. Our reading of that must be placed in the context of a dramatic slowdown in Korean exports. We think it’s a combined effect of the slowdown in Chinese imports of aromatics and polyolefins because Korea’s pricing and costs are being pressured by the U.S. and the Middle East due to lower feedstock cost(s). Note the reinvestment by Korea is trying to address that issue.