MOSCOW (MRC) -- The South Korean government is pushing forward with consolidation of the petrochemical industries, which are mired in a supply glut and the protracted global economic recession, reported GV.
The restructuring on the petrochemical industry is currently led by the Ministry of Trade, Industry, and Energy. Although working-level officials of major petrochemical firms such as LG Chem, Lotte Chemical, and SK Global Chemical held a meeting last month in order to discuss issues like capacity adjustment, they no longer do it out of concern that it might be construed as an act of collusion by the Fair Trade Commission.
At the time of the meeting, the company officials talked about issues such as volume purchase of naphtha and sharing of wharf and storage facilities to save cost.
The focus of the first-stage talks between the companies and the ministry is on consolidating firms producing purified terephthalic acid (PTA), which include Hanwha General Chemical and Samnam Petrochemical.
These companies are facing a serious financial situation after PTA prices tumbled due to overproduction by Chinese producers. In the first half of this year, the two companies posted losses of 23.2 billion won and 15.0 billion won each.
As part of restructuring measures, the government is reviewing ideas of helping these firms reduce cost through sharing of logistics and production facilities.
We remind that, as MRC informed previously, in March 2015, South Korea's Fair Trade Commission (KFTC) gave conditional approval to Hanwha's proposed acquisition of Samsung General Chemicals. The regulatory authority identified that the combined entity could dominate the domestic ethylene vinyl acetate (EVA) market, which could result in higher prices. However, markets of the other three chemical products including low-density polyethylene, linear low-density polyethylene and high-density polyethylene will not be significantly affected by the transaction, KFTC said.
MRC