Petrochemical firms to cut 3.7 mil. tons in NCC capacity through restructuring: minister
Industry Minister Kim Jung-kwan speaks at a meeting with the chief executive officers of local petrochemical companies in Seoul, Monday. Yonhap
Local petrochemical companies plan to voluntarily reduce the combined capacity of their naphtha cracking centers (NCC) by up to 3.7 million tons under far-reaching restructuring measures partly aimed at tackling an industrywide crisis stemming from a global oversupply, the industry minister said Monday.
Industry Minister Kim Jung-kwan made the remark in a meeting with the chief executive officers of local petrochemical companies, also noting that all 16 major petrochemical firms here have submitted their initial business restructuring plans.
Under their restructuring plans, the companies plan to reduce their NCC capacity by 2.7 million to 3.7 million tons, which would account for 18-25 percent of the country's total NCC capacity, Kim said.
Kim vowed to "swiftly" devise a support package for the petrochemical sector's self-rescue plan, including tax incentives, research and development support, and the streamlining of regulations. It will also include support for a transition to high-value and eco-friendly products.
In August, the government unveiled its three principles for helping the ailing petrochemical industry, giving local companies until the end of the year to devise "voluntary" business restructuring plans.
The principles are the "simultaneous" restructuring of three major petrochemical industrial complexes, located in Seosan, Ulsan and Yeosu, respectively; "sufficient" self-rescue efforts and preparations of a feasible business restructuring plan by companies; and the establishment of a "comprehensive" government support package.
Lotte Chemical and HD Hyundai Chemical were the first companies to finalize a restructuring plan, under which Lotte Chemical will spin off its NCC operations at the Daesan petrochemical complex in Seosan, South Chungcheong Province, to create a new entity with HD Hyundai Chemical.
Kim urged the local companies to swiftly finalize their restructuring plans so the government can swiftly review their plans and devise a support package for the sector.
"If this year was about preparing strategies for the successful restructuring (of the petrochemical industry), next year will be about execution, which will determine whether the plan will succeed or fail."