Petrochemical Industry Faces a 'Restructuring Tsunami' on the Brink of Crisis

Yeosu Industrial Complex Falters
Amid Oversupply and Overinvestment

Yeosu Industrial Complex panorama. Provided by Yeosu City

The domestic petrochemical industry is facing an unprecedented crisis. The government has recommended that each company independently submit factory operation plans by the end of the year and, if necessary, reduce large-scale production facilities. This is viewed not as a simple industry adjustment, but as an unavoidable choice for survival.

The biggest cause is oversupply from China. China is importing large quantities of cheap raw materials from Russia to meet its domestic demand, and is flooding overseas markets with the surplus. In addition, the global economic slowdown has further exacerbated the situation, leaving little room for Korean companies’ general-purpose chemical products in the market.

The problem is that Korean companies themselves have contributed to the crisis. While Japan boldly reduced its production facilities as demand fell, Korea continued to expand its capacity. Currently, the domestic ethylene production capacity stands at about 13 million tons per year, and with S-Oil’s new project, it will increase to 14.7 million tons. This is the fourth largest in the world, but at the same time, it is a ‘trap of oversupply’.

The Yeosu Industrial Complex (Yeosu Industrial Complex), the largest petrochemical complex in Korea, is in an especially difficult situation. With seven crackers (naphtha cracking facilities) concentrated in one area, it has been hit hard by oversupply. As competition among companies intensifies, and with low-priced competition from China and the Middle East, there is a growing sentiment that “internal competition makes things even harder.”

An official at the Yeosu Industrial Complex said, “It’s already difficult to compete with cheap Chinese products, but it’s even harder to endure when domestic companies are undercutting each other. In the end, some facilities will inevitably have to stop operating.”

Local residents are also deeply concerned. A resident who runs a small restaurant nearby said, “If the industrial complex struggles, the local economy takes a direct hit. When factory operations decrease, workers spend less, and that impact spreads to the entire local business community.”

This sense of crisis is spreading beyond companies to the broader local community. An official from Yeosu City said, “A significant portion of Yeosu’s economy depends on the industrial complex. If factories shut down, it could lead to reduced tax revenue and instability in local employment.”

While a representative from the local Chamber of Commerce acknowledged the need for restructuring, he also expressed concern about the ripple effects on the region. He said, “Shifting to high value-added products is desirable, but workforce restructuring may be unavoidable in the process. It is essential to devise a soft-landing strategy that takes into account partner companies and small business owners.”

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