SK General Chemical Halts Ulsan NCC Process After 48 Years to Shift to High-Value Products

[Asia Economy Reporter Park So-yeon] SK Innovation announced that SK General Chemical has begun a high-intensity deep change by deciding to suspend the operation of some general-purpose product production processes that are greatly affected by market conditions, in order to innovate its business structure by reducing the proportion of general-purpose chemical products and increasing the proportion of high value-added chemical products.

On the 26th, SK General Chemical announced that it will suspend the operation of the NCC (Naphtha Cracking Center, 1st Naphtha Cracking Process) and EPDM (Ethylene-Propylene Diene Monomer, synthetic rubber manufacturing process) processes within SK Ulsan CLX.

SK General Chemical has decided to suspend the operation of the NCC process, the 1st naphtha cracking process, for the first time in 48 years starting this December. This NCC process began commercial operation in 1972 and was the first domestic naphtha cracking process with an annual capacity of 200,000 tons, marking the beginning of the Korean petrochemical industry. If this process is suspended, SK General Chemical's annual ethylene production will decrease from 870,000 tons to 670,000 tons. The EPDM process, which started commercial operation in 1992 and produces 35,000 tons by receiving raw materials from the NCC plant, is planned to be suspended within the second quarter.

SK General Chemical stated, "The company has been promoting a deep change to reduce the proportion of general-purpose products sensitive to market conditions and shift to the high value-added chemical materials sector, which is hardly affected by market conditions," adding, "Despite efforts to improve processes and maintain stable operations in difficult environments so far, unfortunately, we have no choice but to suspend operations."

They continued, "We also considered oversupply due to global new capacity expansions, competitiveness decline from aging facilities, and related safety and environmental issues," and explained, "However, considering future market conditions and competitiveness, we are also reviewing options such as scrapping, but the timing will be decided based on site utilization and new investment plans."

SK General Chemical plans to reassign employees working in the two processes after stable suspension of operations, taking into account their personal intentions, capabilities, and careers. Additionally, they will notify customer companies receiving products from the two processes about the suspension and prepare stable supply plans for each product to minimize customer damage. Products produced in the NCC process can be stably supplied from the NEP (New Ethylene Plant) process within SK Ulsan CLX, which produces the same products, and EPDM products can be stably supplied from Ningbo EPDM in China.

Along with this, SK General Chemical has decided to accelerate the deep change into a high value-added chemical company. They plan to select the high value-added packaging business as the next-generation growth core area and create results by securing a portfolio through related global M&A.

The acquisition of Arkema, the No. 1 polymer company in France, for its high-performance polymer business, which has been underway since last October, will be completed in the first half of this year. Prior to this, SK General Chemical acquired the ethylene acrylic acid (EAA) and polyvinylidene chloride (PVDC) businesses, which are key materials for adhesive and barrier layers, from Dow in the United States in 2017.

On the 25th, SK General Chemical President Na Kyung-soo wrote to SK General Chemical employees, stating, "From the perspective of 'selection and concentration,' we have inevitably decided to suspend the operation of the NCC and EPDM processes," and added, "We will focus our capabilities to become a leading company in the global market by securing global production bases and entering additional competitive high value-added chemical businesses."

This content was produced with the assistance of AI translation services.