The consulting service aimed at revitalizing the petrochemical industry has been completed and will be submitted to the Ministry of Trade, Industry and Energy within this month. The ministry is expected to unveil follow-up support measures based on this. The ministry has a policy that the petrochemical industry should independently prepare business restructuring plans, but there are prospects that realistic measures will be difficult to come by due to differing positions among companies.
According to the industry on the 23rd, the Korea Petrochemical Industry Association plans to deliver the results of the petrochemical industry restructuring consulting service conducted with the Boston Consulting Group (BCG) to the ministry this month. A representative from the association said, “The ministry is expected to only announce the final plan through consultations with related ministries.”
The consulting service was carried out by the Korea Petrochemical Industry Association, which listened to the opinions of the domestic petrochemical industry. The government announced a follow-up measure to its end of last year’s announcement of the 'Measures to Enhance Competitiveness in the Petrochemical Industry,' which included the sale of existing general-purpose product facilities and the attraction of restructuring in eco-friendly materials and specialty (high-value-added) industries. The goal is to find ways to resolve the problem of excess facilities in the petrochemical industry and strengthen structural competitiveness.
The domestic petrochemical industry has faced criticism for having a high proportion of general-purpose products such as polyethylene (PE) and polypropylene (PP), which results in a decrease in price competitiveness. In response, domestic petrochemical companies are pushing ahead with the sale of existing general-purpose product facilities and naphtha cracking facilities (NCC). Since last year, four petrochemical companies (LG CHEM, LOTTE Chemical, Kumho Petrochemical, Hanwha) have initiated the sale of facilities and subsidiaries, but only LOTTE Chemical has confirmed the sale of a subsidiary.
While there is a growing voice in the industry calling for corporate mergers and restructuring, differing interests make it a challenging situation. The government has reportedly conveyed its position that corporations should autonomously present their business restructuring direction and execution plans. This means that corporations are urged to voluntarily restructure their businesses through methods such as selling businesses, liquidation, and establishing joint ventures.
Minister An Deok-geun said on the 15th in the National Assembly, “If the government forcefully steps in (if the government leads the restructuring), there could be issues. We are currently waiting for the results of the self-consulting entrusted to the industry,” adding that, “We will support the autonomous business restructuring plans as much as possible, and if there are shortcomings, we are preparing to take restructuring actions.”
In response, a National Assembly official said, “It shows that the ministry lacks willpower to leave it to the industry's autonomy, as each company has different interests.”