South Korea's Petrochemical Giants Embark on Major Restructuring Amid Industry Crisis

In a significant move to tackle a deepening crisis within the petrochemical sector, ten South Korean companies have committed to major restructuring efforts. This includes slashing their naphtha-cracking capacity by a substantial 25%, as announced by government officials on Wednesday.

The industry-wide agreement was signed during a pivotal meeting attended by Kim Jung-kwan, the Minister of Trade, Industry and Energy. Executives from key industry players have until the year's end to outline specific plans to meet the requested capacity reductions, which range from 2.7 to 3.7 million metric tons annually.

Finance Minister Koo Yun-cheol emphasized that a reduction in overcapacity and a focus on enhancing competitiveness are crucial. Meanwhile, the sector's largest companies such as LG Chem and GS Caltex, among others, face pressure to quickly adapt, particularly as the government promises support only to those actively restructuring. Industry experts warn global oil markets may feel the ripple effects if South Korea curtails its naphtha imports.

(With inputs from agencies.)