MOCOW (MRC) -- South Korea’s 2015 petrochemical exports plunged 21.6% to USD37.78 billion on year due to softened demand from China and the sustained low oil prices, according to a report released by the Korea International Trade Association (KITA), said TPS.
The main driver behind the plunge in South Korea’s petrochemical exports in 2015 was the sustained low oil prices which translated into lower unit price of petrochemical products.
For instance, the Dubai crude oil, which accounts for nearly 70% of total oil imports in South Korea, was averaged at USD26.90/b in January 2016. This was a sharp fall of 41.30% compared to the same month in 2015.
Structural factors that weakened South Korea’s petrochemical exports include the slowdown of the Chinese economy and increased self-sufficiency rates for petrochemical products in China.
Given that exports to China account nearly 50% of total petrochemical exports, this was regarded as a huge blow to South Kora’s export-oriented petrochemical industry.
Just as importantly, the sharp yuan depreciation by the People’s Bank of China (PBOC) has also weakened the competitiveness of South Korea’s petrochemical products.
Looking ahead, it is expected that petrochemical prices will continue to decline further due to low oil prices and exports to remain sluggish throughout Q1 2016.
As MRC informed previously, the South Korean government is pushing forward with consolidation of the petrochemical industries, which are mired in a supply glut and the protracted global economic recession. The restructuring on the petrochemical industry is currently 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 last month in order to discuss issues like capacity adjustment, they no longer do it out of concern that it might be construed as an act of collusion by the Fair Trade Commission.
MRC