MOSCOW (MRC) -- South Korea's 4 largest petrochemical companies are planning to make an investment of approximately 10 trillion won (USD9 bln) in total this year, rising by over 20% from a year ago, as per Plastemart.
LG Chem’s capital expenditure for this year is estimated at 2.7 trillion won (USD2.4 bln. "My company’s average annual investment has been fixed at 3 trillion won (USD2.7 billion) for 2017 to 2019," said LG Chem CFO Jung Ho-young. 1.7 trillion won (USD0.9 bln) is scheduled to go to its battery business and basic material business this year. In addition, an R&D investment of one trillion won is planned for its new businesses such as water treatment and biotechnology development.
The capital expenditure of Lotte Chemical, which posted a profit of 815.2 billion won (USD733 mln) in Q1 of this year, is expected to amount to 2 trillion won (UAD1.8 bln) this year. 120 billion won (USD10.8 miln) is slated to go to its special synthetic rubber manufacturing facilities about to be completed in Yeosu, South Korea and 300 billion won (USD270 mln) is to be invested in its ethylene manufacturing plant scheduled to be completed in the second half of this year in Malaysia. This company is planning to further increase its investment through the IPO of Lotte Chemical Titan in the country and is currently expanding its facilities in its ethylene cracking complex (ECC) in Yeosu in order to increase its production capacity from one million tons to 1.2 million tons. Moreover, its ECC construction project in Louisiana is planned to be completed in the second half of next year at an investment of 2.9 trillion won (USD2.6 billion).
Hanwha Chemical’s subsidiary Hanwha Total, in the meantime, recently decided to invest 500 billion won (USD450 mln) to expand its naphtha cracking center (NCC) in the Daesan Petrochemical Complex. Furthermore, it is going to invest one trillion won in its adhesive manufacturing facilities and the like.
SK Innovation is planning to invest three trillion won this year and most of the amount is likely to go to SK Global Chemical, its subsidiary in the petrochemical industry, for restructuring of its business to revolve around chemical business. In this context, SK Global Chemical acquired Dow Chemical’s ethylene acrylic acid business for 420 billion won (USD378 million) in February this year.
As MRC informed before, in late 2015, the South Korean government was pushing forward with consolidation of the petrochemical industries, which were mired in a supply glut and the protracted global economic recession. The restructuring on the petrochemical industry was led by the Ministry of Trade, Industry, and Energy. Although working-level officials of major petrochemical firms such as LG Chem, Lotte Chemical, and SK Global Chemical held a meeting in September 2015, in order to discuss issues like capacity adjustment, they no longer did it out of concern that it might be construed as an act of collusion by the Fair Trade Commission. At the time of the meeting, the company officials talked about issues such as volume purchase of naphtha and sharing of wharf and storage facilities to save cost. The focus of the first-stage talks between the companies and the ministry was on consolidating firms producing purified terephthalic acid (PTA), which include Hanwha General Chemical and Samnam Petrochemical.
MRC