Emergency Imports and Government Subsidies Ease Naphtha Shortages After Middle East War
Lotte Chemical’s Daesan plant .
Even amid difficulties in naphtha supply caused by the Middle East war, petrochemical companies are successively raising plant operating rates with feedstock secured through emergency procurement.
Following Yeochun NCC and Korea Petrochemical Ind. Co., Lotte Chemical, the industry’s No. 2 player, has also raised the operating rate of its naphtha cracking center, or NCC, into the 80% range, fueling expectations that concerns over a feedstock supply crisis across industry will ease.
According to industry sources on April 29, Lotte Chemical’s Daesan plant recently raised its operating rate by 10 percentage points to 83% from 73%, where it had been maintained since the outbreak of the Middle East war.
Naphtha is an essential feedstock for producing petrochemical products, but domestic major petrochemical companies have recently lowered plant operating rates due to rising prices and supply instability following the Middle East war.
In response, the government has been supporting the stabilization of naphtha supply by subsidizing up to 50% of the increase in naphtha import unit prices in order to prevent the shock from shortages of petrochemical products from spreading across industry as a whole.
The latest increase in operating rates is viewed as part of efforts in line with such policy support.
Lotte Chemical began scheduled maintenance at its Yeosu plant at the end of last month, but to prevent a shortage of medical IV fluid bags, which can only be produced at the Yeosu plant, it also urgently transported 3,900 tons of propylene, the raw material, from the Daesan plant and partially operated the plant for nine days during the maintenance period.
In addition, to prevent disruption in the construction sector, the company is supplying EOA, a feedstock for ready-mixed concrete admixtures, in excess at 7,400 tons per month, equivalent to 140% of domestic monthly demand.
A Lotte Chemical official said, “We are increasing operating rates in order to respond to policy support aimed at stabilizing domestic supply,” adding, “Apart from short-term supply and demand improvements, we will continue efforts to restructure around high-value-added products.”
Recently, the industry has seen a series of measures to raise plant operating rates to stabilize domestic supply of petrochemical products, with Yeochun NCC lifting its operating rate from 60% to 65%, followed by Korea Petrochemical Ind. Co. raising its rate from 62% to 72%.
Jung Min-hee
댓글
0