LG Chem (051910.KS) has successfully imported Russian naphtha as the government explores Russia as an alternative source amid growing supply instability caused by the Middle East crisis.
The Ministry of Trade, Industry and Energy (MOTIE) reported the development on the 30th at a meeting of the Democratic Party of Korea's special committee on economic responses to the Middle East war. According to the committee, LG Chem signed a contract for 27,000 tons of naphtha through a Russian intermediary dealer. The volume is equivalent to roughly one week's supply.
MOTIE explained that alongside private-sector efforts, the government is also working to secure alternative supplies, led by the Ministry of Foreign Affairs. Currently, 45% of Korea's naphtha demand is met through imports, with 77% of that concentrated in the Middle East. The government is mobilizing all diplomatic channels to establish alternative supply routes. The Ministry of Foreign Affairs said it has issued directives on six occasions to 68 overseas missions to identify alternative supply sources for naphtha and other materials.
However, some observers say it will not be easy to realize imports of Russian crude oil and naphtha immediately. One committee member said, "It appears that companies have been activating their own business networks to secure naphtha," adding, "It looked like it will take time before our companies can actually bring in Russian supplies smoothly."
The Democratic Party also requested the government investigate potential violations of the Subcontracting Act, saying major food companies are refusing to accept price increase demands from small and mid-sized plastic container manufacturers whose costs have risen due to the Middle East crisis. A lawmaker who presented at the committee meeting reportedly cited companies such as SPC and Nongshim, pointing out that "large companies receiving containers for ramen, bread, and side dishes are not raising supplier payments, claiming cost increases are a temporary wartime phenomenon, deepening the crisis for small plastic manufacturers."
The Democratic Party instructed the Ministry of SMEs and Startups and the Fair Trade Commission (FTC) to investigate compliance with the supply price indexation system. A party official explained, "We proposed to the government that it conduct a fact-finding investigation into practices such as forcing suppliers to abandon supply price indexation agreements under the Subcontracting Act or the Mutually Beneficial Cooperation Act."
The committee also raised calls to designate synthetic resins as strategic items. As the possibility of supply shortages in plastic containers and packaging materials grows, concerns over hoarding have emerged for some products such as pay-per-volume garbage bags. In particular, while naphtha is currently designated as a strategic item under the Supply Chain Safety Act with exports regulated, committee members pointed to an institutional imbalance: petrochemical companies that receive naphtha as a raw material can produce synthetic resins and export them overseas.
Additionally, calls were made to strengthen monitoring of potential collusion in the petrochemical industry, similar to the investigation already underway against oil refiners. A committee official said, "The prosecution has begun a compulsory investigation into collusion by the four major oil refiners," adding, "The four major petrochemical companies are also simultaneously raising prices by 50%, so the FTC needs to signal that it is monitoring for collusive behavior."