Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Petrochemical industry restructuring gains momentum
Hanwha Group Chairman Kim Seung-youn, front row center, poses with employees at Hanwha TotalEnergies Petrochemical's plant in Seosan, South Chungcheong Province, Tuesday. Courtesy of Hanwha Group
By Park Jae-hyuk
Ruling party lawmaker proposes bill to ease antitrust regulations
Rep. Ju Cheol-hyeon of the ruling Democratic Party of Korea
Cautious optimism is growing about an earlier-than-expected restructuring of the domestic petrochemical sector under the leadership of President Lee Jae Myung, who has pledged policies to support the ailing industry's recovery.
Amid a lingering downturn caused by oversupply of Chinese petrochemical products and sluggish global demand in recent years, industry officials are watching closely to see if the new government will accept their request to ease antitrust regulations on mergers and acquisitions of idle facilities.
Rep. Ju Cheol-hyeon of the ruling Democratic Party of Korea has already proposed legislation for a special law to meet these demands.
Along with 11 other lawmakers, he introduced a bill last week to exempt petrochemical companies from the Monopoly Regulation and Fair Trade Act when they collaborate with competitors to streamline production.
The proposed bill also includes a clause allowing discounts on electricity bills to enhance the industry's competitiveness. It calls for government financial support for the sector such as tax incentives and low-interest loans.
"The proposed bill contains a broad range of support measures aimed at overcoming the industry's crisis and promoting sustainable growth, in response to the sector's demands and the president's campaign pledges," said Ju, who represents the constituency of Yeosu, South Jeolla Province, home to one of Korea's largest petrochemical complexes.
Lotte Chemical's plant in Seosan, South Chungcheong Province / Courtesy of Lotte Chemical
Last December, when the previous administration announced long-awaited measures to boost the petrochemical industry's competitiveness, it did not include a relaxation of antitrust regulations. At the time, the government focused mainly on financial support.
Despite the government's promise of follow-up measures during the first half of this year, a leadership vacuum after former President Yoon Suk Yeol's impeachment over his Dec. 3 martial law declaration made it difficult to pursue government-led industry reforms.
Given that the previous announcement has been considered insufficient to address the current market environment, Ju's latest proposal has received favorable reviews from the industry.
The Yeosu Chamber of Commerce and Industry welcomed the proposal, describing it as a stepping stone to a government-led restructuring of the petrochemical industry.
"Residents of Yeosu are particularly hopeful about job security and economic recovery in the region," the chamber said.
Some companies have already begun discussions to merge their idle facilities.
According to industry officials, Lotte and HD Hyundai are in talks to integrate their naphtha cracking centers in Seosan, South Chungcheong Province. Lotte is reportedly considering transferring its chemical unit's facilities to HD Hyundai Chemical, a joint venture between Lotte Chemical and HD Hyundai Oilbank, a refinery unit of HD Hyundai.
Speculation is growing that petrochemical plants in Yeosu and Ulsan will follow suit if the deal between Lotte and HD Hyundai is successful.
Against this backdrop, Hanwha Group Chairman Kim Seung-youn visited Hanwha TotalEnergies Petrochemical's plant in Seosan on Tuesday, encouraging employees struggling with the ongoing industry slowdown.
His choice of the factory as the first affiliate to visit this year has been interpreted as an attempt to draw government attention to the petrochemical industry.
"There are always new opportunities for those who take bold challenges," Kim said. "I will support Hanwha TotalEnergies, which plays a major role in the group's energy and materials businesses, as it embarks on a new leap forward."