South Korea's Petrochemical Crisis: Restructuring Ahead

South Korea is preparing to unveil a restructuring plan for its ailing petrochemical sector, which Industry Minister Kim Jung-kwan describes as facing a 'grave' situation. The announcement, expected this month, comes amid financial challenges exacerbated by an oversupply in global markets.

Minister Kim pointed to past strategies used in the shipbuilding industry during the late 2010s, urging petrochemical companies to consider asset liquidation and business streamlining. These voluntary adjustments, including facility reconfiguration, are seen as crucial to the sector's survival, according to the industry ministry.

Financial instability looms large, with Yeochun NCC Co. facing significant loan maturities. The sector's margins have substantially dropped due to a decade-long capacity ramp-up, particularly in China, coupled with sluggish demand. Analysts do not predict a margin recovery until 2027, indicating ongoing challenges.

(With inputs from agencies.)