South Korea to announce plan to restructure petrochemical sector facing ‘grave' situation
South Korean petrochemical companies must take lessons from the restructuring of the country's shipbuilding industry in the late 2010s, when shipmakers had to liquidate assets and streamline business areas amid a sharp drop in orders, Kim said.
Margins have plunged for petrochemical companies in South Korea and across the globe due to an oversupply of products caused by relentless capacity additions in the last decade, particularly in China, the biggest petrochemical market. Demand has also been sluggish over the last three to four years.
'A restructuring in the petrochem industry has been highly expected, given the industry is running merely 80 per cent of total capacity in Korea now - meaning we have about a 20 per cent glut here,' said Hwang Kyu Won, an analyst at Yuanta Securities Korea.
Kim, who was speaking at a shipyard, said the petrochemical industry needed to take voluntary measures, including the 'adjustment' of facilities, his ministry quoted him as saying.
There have been concerns as well over the financial health of South Korea's loss-making Yeochun NCC Co (YNCC), a Yeosu-based petrochemical maker that local media says faces 180 billion won (S$166.4 million) in loans coming due at the end of August.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
South Korea's government can use YNCC's travails as an opportunity for a large-scale restructuring in the industry, said the analyst Hwang.
Analysts say the industry does not expect global petrochemical margins to recover before 2027. The last major restructuring for South Korea's petrochemical industry was in 1999 during the Asian Financial Crisis, when YNCC was formed.
President Lee Jae Myung, who took office after a snap election in June, pledged during his campaign to pursue tax support for mergers and acquisitions in the petrochemical industry, and to exempt companies from antitrust regulations to allow more coordination of production and operations.
South Korea's exports of petrochemical products stood at US$21.7 billion in the first half of this year, down 11.1 per cent from a year earlier, amid price declines and global oversupply.
Total exports of petrochemical products were US$48 billion in 2024, accounting for 7 per cent of South Korea's total exports and a top-five export item after semiconductors, automobiles, machinery and petroleum products.
South Korea is one of the world's largest importers of naphtha, a derivative of crude oil that is refined into chemical products used in plastics for automobiles, electronics, clothing and construction. If the country is forced to cut capacity, it could impact global oil markets.
Other South Korean petrochemical companies besides YNCC are also seeing asset reshuffling.
HD Hyundai is looking to acquire Lotte Chemical's naphtha cracker, or the companies may merge their cracker operations, trade sources have said.
HD Hyundai said nothing has been decided yet. REUTERS
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
3 hours ago
- Business Times
National Day Rally: Centring workers while embracing innovation
[SINGAPORE] Even as innovation and technology are key to the country's new economic blueprint, jobs remain the priority, Prime Minister Lawrence Wong said in his second National Day Rally speech on Sunday (Aug 17). 'Ultimately, our economic strategy is about jobs, jobs and jobs,' he said. 'That's our number one priority.' In a speech with few policy announcements, three new moves were about jobs: community-based job matching ; improvements to a scheme for mid-career workers ; and government-funded traineeships for fresh graduates . In the first National Day Rally of the current government term, PM Wong thanked citizens for the mandate given to the People's Action Party in the 2025 General Election , and laid out how his team will take the country forward. He covered five themes: the economy; supporting youths; seniors; building infrastructure for the future; and fostering a collective 'Singapore spirit'. In a more troubled and turbulent era, where rivalry is intensifying and trust is in short supply, Singapore cannot resign itself to being a bystander, said PM Wong. 'We will take charge of our own destiny.' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up A new economic blueprint Many deals have been struck since the US first announced its 'Liberation Day' tariffs in April. Yet even when tariffs were lowered, their rates are still high, noted PM Wong. US-China negotiations also remain unresolved. While the 10 per cent baseline tariff on Singapore is the lowest rate available, 'this gives us little comfort', he added. The US could raise the baseline rate, or set higher tariffs on industries such as pharmaceuticals and semiconductors, which are key for Singapore's economy. Singapore needs a new economic blueprint with refreshed strategies for its future, which is why the Singapore Economic Resilience Taskforce was convened. One overarching priority is innovation and technology, said PM Wong. Noting the fruits of past research and development (R&D) efforts, he said the same long-term approach now applies to frontier technologies such as quantum computing. 'But it's not just about cutting-edge R&D,' he said. 'Equally, if not more important, is how quickly new technologies are adopted across the entire economy.' Artificial intelligence (AI), for instance, is already being used in everyday life and in the civil service. But he added: 'The real game changer lies in using AI to raise productivity and create new value through every part of the economy.' Singapore will help companies big and small to harness AI and automation to stay competitive, he said. Yet technology will also disrupt jobs, with some roles disappearing even as new ones – requiring higher skills but fetching better pay – emerge. Said PM Wong. 'I assure you: even as we embrace AI and technology, we will not lose sight of our key priority. Singaporeans will always be at the centre of everything we do.' The government will not rush to adopt technology, but will instead work with unions and workers to equip them for new opportunities through upskilling and job redesign. Community Development Councils (CDCs) will lead a new town-based job-matching initiative, with details to be shared by the mayors soon. As the CDCs have strong networks with local businesses and community partners, they are 'well-placed' to match jobseekers – particularly those who prefer working closer to home – with vacancies, said PM Wong. The SkillsFuture Level Up programme for mid-career workers will also see two key enhancements. The programme provides S$4,000 in SkillsFuture credits as well as training allowances of up to S$3,000 a month, for up to 24 months, for full-time studies. Now, workers will be able to claim a portion of the training allowance for part-time courses. Eligible courses will also be expanded to include more conducted by industry leaders and private training providers. Youth and seniors Jobs for fresh graduates were another focus. Noting their concerns about jobs, PM Wong announced a new government-funded traineeship programme. This will be for fresh graduates from the Institute of Technical Education, polytechnics and universities. It will begin with a 'more focused roll-out', but will be scaled up if the economy worsens, said PM Wong. While youths today enjoy more opportunities than ever, they face a very different and complex set of challenges, he noted. Besides graduate jobs, he addressed digital concerns – such as online harms and AI use in schools – and the threat of vaping. Besides e-cigarettes, many vapes are laced with addictive and harmful substances, noted PM Wong. Singapore will therefore treat vaping as a drug issue and take much stronger action. Those selling vapes with harmful substances will face stiffer penalties, including jail sentences. Vaping addicts will receive supervision and rehabilitation to help them quit. Besides nurturing youths, Singapore will also take good care of its seniors, said PM Wong. Existing initiatives such as Healthier SG and Age Well SG encourage seniors to lead healthy and active lives. But one major gap remains, he said: long-term care and living arrangements. Singapore will thus build 'Age Well Neighbourhoods' to support seniors where they live. These estates will be more senior-friendly with relevant spaces and facilities; expanded home-based services; and improved access to healthcare. The first of such neighbourhoods will be in Toa Payoh and 'one to two other areas with a high concentration of seniors'. Building a future Towards the end of the rally, PM Wong turned to Singapore's infrastructure, noting coastal defences against rising sea levels and highlighting plans for three northern towns : Woodlands, Kranji and Sembawang. 'Land is limited and precious, so we will take proactive steps to protect whatever we have,' he said. 'At the same time, we have to continually rejuvenate and refresh our existing land, and re-imagine new uses for them.' He elaborated on ideas from the Draft Master Plan released by the Urban Redevelopment Authority in June, which aim to make the towns more vibrant. For instance, transport infrastructure in Woodlands will be improved to support the Johor-Singapore Special Economic Zone in achieving its potential. At the same time, work continues to protect Singapore against climate change and rising sea levels – starting with the most vulnerable areas, such as the 'Long Island' project for the south-eastern shorelines and protection works around Changi Bay. For Singapore to continue progressing, good plans are just the first step, said PM Wong. 'What matters just as much, and even more, is the collective will of our people.' The country must be a 'we-first' society, where the collective good is put above personal interest and Singaporeans step forward 'to take responsibility for one another', he said. In other countries, such ground-up action arises because governments are ineffective, noted PM Wong. In contrast, Singapore's government strives to be more efficient and responsive. But Singapore should not become a society where people rely solely on the government, he added. 'It's about all of us – government, businesses, workers and unions, community groups and civil society – doing our part.' 'That's how my team and I intend to lead,' he said. 'Not just doing things for Singaporeans, but doing things with Singaporeans.'
Business Times
3 hours ago
- Business Times
National Day Rally: Singaporeans the key priority while nation embraces innovation
[SINGAPORE] Even as innovation and technology are key to the country's new economic blueprint, jobs remain the priority, Prime Minister Lawrence Wong said in his second National Day Rally speech on Sunday (Aug 17). 'Ultimately, our economic strategy is about jobs, jobs and jobs,' he said. 'That's our number one priority.' In a speech with few policy announcements, three new moves were about jobs: community-based job matching ; improvements to a scheme for mid-career workers ; and government-funded traineeships for fresh graduates . In the first National Day Rally of the current government term, PM Wong thanked citizens for the mandate given to the People's Action Party in the 2025 General Election , and laid out how his team will take the country forward. He covered five themes: the economy; supporting youths; seniors; building infrastructure for the future; and fostering a collective 'Singapore spirit'. In a more troubled and turbulent era, where rivalry is intensifying and trust is in short supply, Singapore cannot resign itself to being a bystander, said PM Wong. 'We will take charge of our own destiny.' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up A new economic blueprint Many deals have been struck since the US first announced its 'Liberation Day' tariffs in April. Yet even when tariffs were lowered, their rates are still high, noted PM Wong. US-China negotiations also remain unresolved. While the 10 per cent baseline tariff on Singapore is the lowest rate available, 'this gives us little comfort', he added. The US could raise the baseline rate, or set higher tariffs on industries such as pharmaceuticals and semiconductors, which are key for Singapore's economy. Singapore needs a new economic blueprint with refreshed strategies for its future, which is why the Singapore Economic Resilience Taskforce was convened. One overarching priority is innovation and technology, said PM Wong. Noting the fruits of past research and development (R&D) efforts, he said the same long-term approach now applies to frontier technologies such as quantum computing. 'But it's not just about cutting-edge R&D,' he said. 'Equally, if not more important, is how quickly new technologies are adopted across the entire economy.' Artificial intelligence (AI), for instance, is already being used in everyday life and in the civil service. But he added: 'The real game changer lies in using AI to raise productivity and create new value through every part of the economy.' Singapore will help companies big and small to harness AI and automation to stay competitive, he said. Yet technology will also disrupt jobs, with some roles disappearing even as new ones – requiring higher skills but fetching better pay – emerge. Said PM Wong. 'I assure you: even as we embrace AI and technology, we will not lose sight of our key priority. Singaporeans will always be at the centre of everything we do.' The government will not rush to adopt technology, but will instead work with unions and workers to equip them for new opportunities through upskilling and job redesign. Community Development Councils (CDCs) will lead a new town-based job-matching initiative, with details to be shared by the mayors soon. As the CDCs have strong networks with local businesses and community partners, they are 'well-placed' to match jobseekers – particularly those who prefer working closer to home – with vacancies, said PM Wong. The SkillsFuture Level Up programme for mid-career workers will also see two key enhancements. The programme provides S$4,000 in SkillsFuture credits as well as training allowances of up to S$3,000 a month, for up to 24 months, for full-time studies. Now, workers will be able to claim a portion of the training allowance for part-time courses. Eligible courses will also be expanded to include more conducted by industry leaders and private training providers. Youth and seniors Jobs for fresh graduates were another focus. Noting their concerns about jobs, PM Wong announced a new government-funded traineeship programme. This will be for fresh graduates from the Institute of Technical Education, polytechnics and universities. It will begin with a 'more focused roll-out', but will be scaled up if the economy worsens, said PM Wong. While youths today enjoy more opportunities than ever, they face a very different and complex set of challenges, he noted. Besides graduate jobs, he addressed digital concerns – such as online harms and AI use in schools – and the threat of vaping. Besides e-cigarettes, many vapes are laced with addictive and harmful substances, noted PM Wong. Singapore will therefore treat vaping as a drug issue and take much stronger action. Those selling vapes with harmful substances will face stiffer penalties, including jail sentences. Vaping addicts will receive supervision and rehabilitation to help them quit. Besides nurturing youths, Singapore will also take good care of its seniors, said PM Wong. Existing initiatives such as Healthier SG and Age Well SG encourage seniors to lead healthy and active lives. But one major gap remains, he said: long-term care and living arrangements. Singapore will thus build 'Age Well Neighbourhoods' to support seniors where they live. These estates will be more senior-friendly with relevant spaces and facilities; expanded home-based services; and improved access to healthcare. The first of such neighbourhoods will be in Toa Payoh and 'one to two other areas with a high concentration of seniors'. Building a future Towards the end of the rally, PM Wong turned to Singapore's infrastructure, noting coastal defences against rising sea levels and highlighting plans for three northern towns : Woodlands, Kranji and Sembawang. 'Land is limited and precious, so we will take proactive steps to protect whatever we have,' he said. 'At the same time, we have to continually rejuvenate and refresh our existing land, and re-imagine new uses for them.' He elaborated on ideas from the Draft Master Plan released by the Urban Redevelopment Authority in June, which aim to make the towns more vibrant. For instance, transport infrastructure in Woodlands will be improved to support the Johor-Singapore Special Economic Zone in achieving its potential. At the same time, work continues to protect Singapore against climate change and rising sea levels – starting with the most vulnerable areas, such as the 'Long Island' project for the south-eastern shorelines and protection works around Changi Bay. For Singapore to continue progressing, good plans are just the first step, said PM Wong. 'What matters just as much, and even more, is the collective will of our people.' The country must be a 'we-first' society, where the collective good is put above personal interest and Singaporeans step forward 'to take responsibility for one another', he said. In other countries, such ground-up action arises because governments are ineffective, noted PM Wong. In contrast, Singapore's government strives to be more efficient and responsive. But Singapore should not become a society where people rely solely on the government, he added. 'It's about all of us – government, businesses, workers and unions, community groups and civil society – doing our part.' 'That's how my team and I intend to lead,' he said. 'Not just doing things for Singaporeans, but doing things with Singaporeans.'
Business Times
5 hours ago
- Business Times
National Day Rally: Low US tariff on Singapore is of ‘little comfort', says PM Wong
[SINGAPORE] Though the US has kept tariffs on Singapore at the lowest baseline rate of 10 per cent, that is of 'little comfort', Prime Minister Lawrence Wong said during his National Day Rally speech on Sunday (Aug 17). This is 'because no one knows if – or when – the US might raise the baseline, or set higher tariffs on specific industries like pharmaceuticals and semiconductors,' he said. What is known is that there will be more trade barriers, and that means small and open economies such as Singapore 'will feel the squeeze'. This was PM Wong's second National Day Rally since taking the helm in May 2024, and his first since the ruling People's Action Party scored a landslide victory at the 2025 General Election in May. Singapore also celebrates its 60th year of independence this year, which 'comes at a turning point in global history' and marks the start of a new chapter, said PM Wong. But this new chapter starts in a 'more troubled and turbulent world', he warned. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Uncertain times PM Wong said that, for decades, Singapore benefited from a US-led rules-based global order where all could compete fairly. But the US is now pulling back, weakening the multilateral system, with old norms no longer holding. 'So now, it is every country for itself – in a world where rivalry is intensifying and trust is in short supply,' he added, noting recent geopolitical conflicts in Europe, the Middle East and even in Asia and South-east Asia. While the road ahead will be tough, Singapore will 'take charge of (its) own destiny', he said. He acknowledged that the economy 'is on everyone's mind', following the US' 'Liberation Day' tariffs. Though many deals have been struck and some tariffs lowered, these remain in the range of 10 to 30 per cent, 'the highest US tariff rates in nearly a century'. The US-China tariff situation has also yet to be resolved. While earlier steep rates have been suspended with ongoing talks, tariffs on many goods remain above 50 per cent and 'deep mistrust' continues. In response to the changing tariff environment, the Singapore Economic Resilience Taskforce was convened, led by Deputy Prime Minister Gan Kim Yong. The team is negotiating deals to secure Singapore's interests and rolling out support for businesses and workers. The Singapore Economic Resilience Taskforce, chaired by DPM Gan Kim Yong, is negotiating deals to secure Singapore's interests. PHOTO: BT FILE But 'the external shifts we see today are not temporary', said PM Wong, warning that the US and China may keep drifting apart, and the global economy will become more contested and fragmented. That is why Singapore needs a new economic blueprint, and the task force is working 'to review and refresh our economic strategies', in an effort involving younger political office holders, industry partners and union leaders. The government will relook many key issues, he said, including how to remain competitive amid rapid external changes; how to secure access to green energy; and how to help businesses enter and expand in overseas markets, and become global leaders.
