The government implements subsidy policy that covers 50 percent of the increase in naphtha import prices
Yeochun NCC.
South Korea’s naphtha cracking center industry is moving to restore operating rates, supported by recent government measures.
Yeochun NCC said on April 27 that it has raised its plant utilization rate to 65 percent from 60 percent, backed by policies aimed at stabilizing the supply and demand of naphtha.
Yeochun NCC is a 50-50 joint venture between Hanwha Solutions and DL Chemical and operates four plants in Yeosu, South Jeolla Province as a specialized naphtha cracking company.
The decision to raise the utilization rate reflects supply stabilization measures, including government subsidies covering naphtha purchase costs and the establishment of a financial support framework for naphtha by the financial sector.
Last month, Yeochun NCC’s utilization rate fell to 55 percent as the company faced rising raw material prices and supply instability caused by the prolonged conflict in the Middle East. Concerns over production disruptions grew, with the company even reviewing the possibility of additional shutdowns.
The petrochemical industry uses naphtha as a raw material to produce basic feedstocks such as ethylene and propylene. These serve as essential raw materials for everyday items such as vinyl, plastic bottles and packaging. A decline in NCC operating rates is highly likely to lead to supply shortages for these related products.
Following the implementation of a government subsidy policy that covers 50 percent of the increase in naphtha import prices, the operating rate recovered to 60 percent on April 10. Additional conditions for further increases were created as the financial sector agreed to establish a Middle East-related naphtha financial support framework.
Building on this government support, Yeochun NCC has also moved to diversify its raw material procurement. The company is strengthening supply chain stability by securing naphtha from various regions, including Greece, Algeria, Nigeria, Egypt, Oman, and Saudi Arabia.
Jung Min-hee
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