Following LG Chem, Lotte Chemical is shutting down production at its plant in the Yeosu National Industrial Complex in South Jeolla Province. As the Middle East war has triggered an emergency in naphtha supply, the industry is taking preemptive steps to manage risk.
Lotte Chemical (011170.KS) disclosed on the 27th that it will halt operations at all production facilities at its Yeosu plant. Production is scheduled to resume on May 29. The shutdown comes as the company moved up its planned turnaround (TA) maintenance — originally scheduled for the 18th of next month — by approximately three weeks. "We expect a decline in revenue during the scheduled maintenance period, but we will resume production once the maintenance is completed," Lotte Chemical said.
Earlier, LG Chem (051910.KS) also halted operations at its No. 2 naphtha cracking center (NCC) plant in the Yeosu complex on the 23rd. LG Chem plans to keep the No. 2 plant offline and operate only the No. 1 plant until naphtha supply stabilizes.
The successive shutdowns across the petrochemical industry are interpreted as preemptive measures against raw material supply difficulties, as naphtha supply disruptions and inventory shortages are becoming a reality. The government, also recognizing the severity of the situation, enacted and enforced the "Regulations on Naphtha Export Restrictions and Supply Stabilization" effective midnight the same day.
Meanwhile, the Korea Chemical Industry Association emphasized that it plans to actively cooperate with the government's measures so that the industry and government can work together to overcome the crisis. "The petrochemical industry is a core national industry closely linked to various downstream industries such as automobiles, electronics, construction, and textiles, as well as essential daily materials including vinyl and plastics," the association said. "With a sense of responsibility as a nationally essential industry, we will actively cooperate with the government's emergency economic response measures and the naphtha supply stabilization order, and do our best to stabilize the domestic industrial supply chain." It added, "We ask the government to provide continued attention and support, taking into account the difficulties the industry is facing."
