When the government imposed a total ban on exports of naphtha, a key petrochemical feedstock, in late March as the U.S.-Iran war intensified, the industry called it a "hardline" measure. Although exports account for only about 11 percent of Korea's total naphtha production, the export restriction represented the government actively blocking corporate economic activity, and it also had to consider relations with major existing naphtha importers such as China, Japan, and Singapore.
"At the time, the situation was so urgent that domestic petrochemical companies held only two to three weeks' worth of naphtha inventory," a petrochemical industry official said. "In the end, it was a good measure in that it stabilized our country's supply and demand."
Immediately after the measure took effect, most export-bound naphtha was switched to domestic use. According to the Korea International Trade Association on the 16th, naphtha export value in April fell to $585 (about 880,000 won). Only 308 kilograms of naphtha were exported with government approval. Considering that about 310,000 tons of naphtha were exported in February before the war, the volume shrank to about one-millionth of its previous level. May naphtha exports rose to $75 million, or about 75,700 tons, compared with April, but the export volume was still down nearly 80 percent from a year earlier.
The strong supply-securing measures helped prevent Korea's "naphtha shock." Compared with Japan, which suffered from naphtha shortages, the defensive measures were well executed. As the government implemented various measures—including supply-demand adjustments and 50 percent support for the difference in naphtha import prices, in addition to the export restrictions—May naphtha supply reached more than 90 percent of pre-war normal levels. The utilization rate of naphtha cracking centers (NCC), which had been successively lowered in March, also recovered to normal levels. Shortages of essential goods such as garbage bags, which had once prompted "crisis" speculation, and of health and medical essentials such as medical gloves, syringes, and IV solution packaging did not materialize.
On the other hand, Korea's naphtha export restriction posed another challenge for the trade and industrial sectors. Among major naphtha importers such as China and Japan, a sense of crisis is spreading that "Korea cannot be relied on alone."
Kim Yong-beom, head of the Presidential Office's Policy Office, pointed out on his Facebook page on March 28, the day after the naphtha export restriction notice took effect, that "naphtha export controls are an unavoidable choice to protect the domestic production base, but export controls solve domestic problems while at the same time creating international problems." Kim also said, "The experience of supply being cut off during a crisis is not merely an incident but remains as a policy memory, and even after the situation ends, that memory changes the direction of trade relations and can sometimes lead to retaliation and substitution strategies." He added, "If we lose the larger currents of lithium and energy while trying to protect naphtha, that would truly be penny-wise and pound-foolish." Since China imports about 1.7 million to 2 million tons of naphtha from Korea each year, the export controls serve as a warning that they could come back as a boomerang if another crisis arises in core items where dependence on China is overwhelming, such as lithium and graphite.
Meanwhile, the global naphtha crisis triggered by the Middle East war is expected to accelerate de-plasticization across industries. The government aims to reduce the disposal volume of new plastic made from naphtha in 2030 to about 7 million tons, 30 percent below the previous estimate of 10 million tons. Considering that household and business waste plastic discharge was 7.8 million tons in 2024, this goal means keeping future waste plastic discharge from exceeding current levels. The government also plans to strengthen regulations to set recycled-material usage targets for major household items in which naphtha is a key raw material, such as food and cosmetic containers and vinyl. Currently, recycled-material usage targets apply only to colorless PET bottles, and the government plans to expand this. The government plans to expand the range of those subject to waste disposal charges—levied on manufacturers of products, materials, and containers that are difficult to recycle—and to make the charge rates more realistic.
