Asian petrochemical producers chase ethane gains as margins dwindle
These include South Korea's largest cracker operator YNCC and SP Chemicals in China. In Japan, Mitsui Chemicals is studying the use of ethanol at existing crackers.
The change will allow operators to keep their feedstocks flexible with U.S. ethane exports forecast to rise by about 7% in 2025. Ethane, a byproduct of shale gas, is typically cheaper than the more widely used naphtha.
South Korea's YNCC is re-evaluating its investment plans to improve cost efficiency at its crackers, which have been running at minimum utilisation rates of 70–80% so far this year, its CEO You-Jin Lee said at the Asia Petrochemical Industry Conference (APIC) in Bangkok last week.
"One of the ways we can do it is by increasing (the) use of ethane," said Lee.
In China, SP Chemicals is studying plans to increase ethane use at its petrochemical complex in eastern China's Jiangsu province to up to 90% from 75%.
"Flexible crackers will ultimately be the fittest to survive when margins are plunging," said a source at an east-China naphtha cracker who declined to be named because they were not authorised to speak to the media.
"New entrants into the market will want to import cheap U.S. ethane," Armaan Ashraf, global head of natural gas liquids, at consultancy FGE, said, referring to petrochemical projects in the Middle East, Russia and Asia.
Thailand's PTT Global Chemical will begin to use U.S.-ethane as an alternative feedstock at its petrochemical complex, securing 400,000 tons annually starting in 2029, the company said in a report released at APIC.
In Europe, where global chemical giants have announced closures due to high operating costs and weak margins, INEOS is building a 1.45 million tons per year cracker, the U.S. Energy Information Administration said in its May 6 report.
EIA expects this project to utilise up to 75,000 barrels per day of ethane when it comes online in mid-2026.
Other importers, such as India, will have to build infrastructure including storage and ships to boost the use of ethane at their plants, an Indian industry source said.
For example, ONGC (ONGC.NS), opens new tab is seeking partners to build large ethane carriers to ship in 800,000 metric tons per year from May 2028 for its western India petrochemical plant.
EIA expects U.S. ethane production to rise to a new record 3.1 million bpd in 2026 from 2.9 million bpd in 2025.
This will increase U.S. exports to 540,000 bpd in 2025 and 640,000 bpd in 2026, EIA said.
EIA expects Wanhua Chemical's newly started cracker in eastern China's Yantai city, which can process ethane or naphtha, to add 50,000-75,000 bpd of U.S. ethane export demand this year.
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Yet the government kept electricity prices artificially low, a political choice that pushed Kepco's debt to a staggering 205tn won (£111bn) by 2024. Despite this crisis, meaningful reform remains elusive. This entrenched monopoly system has effectively blocked the clean energy transition, with independent renewable producers struggling to gain meaningful access to a market dominated by fossil fuel interests. Carbon-intensive by design More broadly, South Korea's postwar rise relied on energy-intensive industries: steel, petrochemicals, shipbuilding and semiconductors. 'This structural dependency on heavy and chemical industries makes the energy transition extraordinarily difficult,' says Park Sangin, a professor of economics at Seoul National University. 'These industries are deeply embedded in the country's economic fabric and require vast amounts of stable, cheap electricity.' 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Now a new generation of South Koreans is challenging the status quo through legal action. In February, a group of children gathered outside Posco's office in Seoul. Among them was 11-year-old Yoohyun Kim, the youngest plaintiff in a groundbreaking lawsuit against Posco. The case aims to block the company's plan to reline an old coal-fired blast furnace, a move that would extend its life by 15 years and emit an estimated 137m tonnes of CO2. 'I came here during my precious winter break, my last as an elementary school student, because I want to protect all four seasons,' Yoohyun told supporters. 'Spring and autumn are disappearing with climate change – and with them, the chance for children like me to play freely outside.' The lawsuit is the first of its kind globally to target traditional blast furnace production. It follows a crucial ruling by South Korea's constitutional court last August which found that the government's climate policies violated the rights of future generations by failing to set legally binding targets for 2031-50. In March, residents and activists filed another suit over the government's approval of the world's largest semiconductor cluster in Yongin, backed by a 360tn won (£195bn) Samsung investment. The suit argues that the project's 10GW electricity demand and new LNG plants contradict climate regulations and corporate sustainability commitments. Kim Jeongduk, an activist from Political Mamas who participated in protests against the Samcheok Blue plant with her child, sees this as a generational struggle. 'Growing up in Pohang, I saw smokestacks fill the sky on my way to school every day. My throat would hurt from fine dust, and iron particles would collect on our windowsills,' she recalls. 'Adults always said: 'Thanks to Posco, our region survives.' I don't want my child to grow up with that same false choice between a healthy environment and economic survival.' The international data shows that South Korea's emissions peaked in 2018, and have been falling, with a brief jump after Covid, ever since. The government maintains that it is making progress on its climate goals, although critics argue that it is relying on some wonky calculations around its 2030 emission reduction target, confusing net with gross emissions. 'South Korea is actively pursuing bold reduction of coal power generation through prohibiting new permits for coal power plants and phasing out ageing facilities,' the ministry said in a statement, arguing that any remaining coal plants operating beyond 2050, such as those approved before the 2021 ban, would be addressed through 'carbon capture and storage technology and clean fuel conversion' in a way 'not inconsistent with our carbon neutrality commitment'. But independent analysis suggests these measures fall well short. 'The Basic Plan has no specific plan for how to expand renewable energy,' says Prof Park. 'There are vague targets, but no timeline, no locations. In stark contrast, the nuclear roadmap is extremely detailed and specific.' His recent research using the Global Change Assessment Model shows the current plan would fall short of meeting South Korea's 2030 emissions targets by approximately 6-7%. A more ambitious policy focused on offshore wind expansion and a complete phase-out of coal by 2035 could not only meet climate goals but reduce power sector emissions by 82% by 2035. When confronted with criticisms of its emissions accounting, South Korea's environment ministry defended its approach: 'Our emissions reduction target calculation method considers international regulations and major country cases. Countries like Japan and Canada use similar calculation methods for their 2030 NDCs,' a spokesperson said. The ministry added that although previous targets used the older 1996 IPCC guidelines, from 2024 they have begun using the updated 2006 standards for national greenhouse gas statistics. Back in Samcheok, Eunbin Kang looks out at the coal plant that now dominates the coastal landscape. 'I dream of a society where exploitation and plunder are replaced by decentralisation and autonomy,' she says. 'I want to contribute to spreading lifestyles and policies that allow everyone to lead a good life without requiring a lot of electricity or money.'
