Korea to curb naphtha exports this week

Plastic garbage bags are displayed at a supermarket in Seoul, Tuesday. Yonhap

The government plans to begin restricting naphtha exports by oil refiners this week. The emergency measure is in response to a shortage of the key petrochemical feedstock, which was designated last week as critical to economic security.

Firms hoarding naphtha will also face severe penalties, including the cancellation of their business registrations.

“For essential facilities to stay operational, the government will order adjustments to the overall naphtha supply if the situation worsens,” Yang Ghi-wuk, deputy minister for industry, trade and resource security, said Tuesday during a daily briefing on the Middle East crisis.

The plan addresses concerns about potential setbacks in the production of petrochemical-based goods due to the war in Iran, which has disrupted naphtha shipments through the Strait of Hormuz. Before the conflict, more than half of Korea’s naphtha imports passed through the strait.

Refined from crude oil, naphtha is used to produce raw materials for petrochemical products such as plastic bags, food packaging and cosmetic containers.

About 55 percent of Korea’s naphtha supply is produced domestically. According to data from the Korea National Oil Corp. and the Korea International Trade Association, the country exported 3.9 million tons out of 33 million tons of domestically produced naphtha in 2025.

President Lee Jae Myung addressed the issue during a Cabinet meeting the same day.

“Petrochemical products are used in everything from food delivery containers to medical equipment, making it difficult to predict when and where disruptions might occur,” he said.

“This poses a serious threat to people’s daily lives, and the government must proactively activate an emergency response system at the national level.”

LG Chem's factory in Yeosu, South Jeolla Province / Courtesy of LG Chem

Global naphtha prices have nearly doubled from prewar levels, surpassing $1,000 per ton and prompting LG Chem, Yeochun NCC and Lotte Chemical to suspend parts of their naphtha cracking centers, which produce ethylene, a raw material for plastics, synthetic fibers and synthetic rubber.

The government ruled out the possibility of these shutdowns significantly disrupting supply chains, citing the relatively smaller capacities of affected facilities.

However, consumers have already started panic buying of plastic garbage bags, which are made using naphtha, as the bags are necessary for the disposal of nonrecyclable waste.

An online garbage bag seller recently warned customers of production and supply delays, citing the global situation.

As rumors spread online about supermarkets running out of plastic garbage bags, the Ministry of Climate, Energy and Environment asked local governments to inspect regional inventories. Municipalities have since reassured residents that there is no supply shortage.

Major food companies including Nongshim and Dongwon F&B also denied any shortage of packaging materials, though they said they are closely monitoring the situation in the Middle East.

“Despite high costs, companies have continued importing naphtha to keep their factories running through May,” Yang said. “We plan to use part of the proposed extra budget to help companies secure alternative sources of naphtha imports.”

Even so, the government acknowledged that home appliance manufacturers could face shortages of polypropylene and acrylonitrile butadiene styrene, materials derived from naphtha and used for the interior and exterior parts of washing machines.

Smaller plastic product manufacturers have also raised concerns about dwindling feedstock supplies.

During a meeting Tuesday with the ruling Democratic Party of Korea’s leadership, Korea Federation of SMEs Chairman Kim Ki-mun warned that some small manufacturers may have to shut down due to limited naphtha imports and reduced operations at major petrochemical firms.