LG Chem (051910.KS), SK Chemicals (285130.KS), and GS Caltex, a unit of GS (078930.KS), are accelerating the commercialization of advanced recycling technologies that use waste plastics as feedstock alternatives in the wake of Middle East tensions. The move aims to break through chronic supply chain risks and reduce dependence on imports by directly producing pyrolysis oil and petroleum products.
According to industry sources on the 6th, major Korean petrochemical and refining companies are expanding investments in waste plastic recycling technology as raw material supply chains have been shaken by naphtha supply instability. Previously, recycling technology was merely a means to respond to the European Union's eco-friendly regulations, but it has now emerged as a new alternative that goes beyond the traditional solution of supply chain diversification.
LG Chem is staking its future on pyrolysis oil production. To this end, the company has championed "supercritical pyrolysis," which decomposes mixed waste plastics using steam generated when temperature and pressure exceed the critical point of water. Productivity is overwhelming, as more than 8 tons of pyrolysis oil can be obtained from 10 tons of waste plastic input. The company has already completed Korea's first pyrolysis oil plant at the Seokmun National Industrial Complex in Dangjin, South Chungcheong Province, with an investment of 310 billion won ($225 million), and is currently conducting trial operations. Depending on how supply chain stabilization progresses, the company plans to expand investment and raise the share of recycled feedstock by combining the produced pyrolysis oil with eco-friendly bio-oil (HVO).
The pyrolysis oil market is growing rapidly on the back of recycling technology. According to the petrochemical industry, pyrolysis oil production, which stood at 700,000 tons in 2020, is projected to grow by an annual average of more than 17% to reach 3.3 million tons by 2030. Earlier, S-Oil (010950.KS) introduced initial volumes of waste plastic pyrolysis oil into its refining process in 2024. LG Chem's move is interpreted as having this growth trajectory in mind.
SK Chemicals is taking a head-on approach with "depolymerization" technology. Conventional physical recycling, which involves crushing, washing, and remelting waste plastics, has limitations in that quality is easily affected by usage history and impurities. In contrast, depolymerization technology breaks down waste plastics at the molecular level, achieving physical properties and quality on par with virgin plastics. The company utilizes this technology at its Shantou plant in China to produce 100,000 tons of recycled feedstock (r-BHET) and recycled PET (r-PET). In addition, to ensure smooth plant operations, the company plans to produce 16,000 tons of depolymerization feedstock in the second half of this year at the "Recycle Feedstock Innovation Center (FIC)," a joint venture with Chinese recycling specialist Kelinle in Shaanxi Province, and scale up to 32,000 tons annually.
GS Caltex is making full use of its existing refining infrastructure. The method involves directly injecting recycled oil extracted from waste plastics into the actual refining process to create "circular petroleum products." The company believes that utilizing recycled oil in conjunction with existing facilities can reduce dependence on crude oil while diversifying the feedstock structure of the refining and petrochemical industries as a whole.
The global plastic recycling market is also rapidly expanding, aligned with environmental concerns and strengthening resource security. According to market research firm MarketsandMarkets, the global plastic recycling market grew at an annual average rate of 8.1%, from $58 billion (approximately 84.11 trillion won) in 2019 to $69.4 billion (approximately 100.64 trillion won) in 2023. It is projected to reach $120 billion (approximately 174.02 trillion won) by 2030. The Korea Institute of Science and Technology Information (KISTI) forecasts that the domestic market will also expand from 1.67 trillion won in 2019 to 2.85 trillion won by 2027.
"Recycling is not a matter to be judged solely by immediate economic feasibility, but rather a resource security option that can mitigate the recurring raw material supply instability that occurs in countries without natural resources," an industry official said, citing the need to advance recycling technology.
The official added, "There is a need to redesign Korea's recycling system, which has been built around physical recycling, to expand the range of recyclable feedstocks and their applications."
