Seeking Competitiveness
The petrochemical industry is struggling to recover, scrambling to secure growth drivers in specialty areas. In response to China’s expansion of its self-sufficiency rate, they are trying to secure market competitiveness by focusing on high-value-added products. In particular, they are actively fostering related materials businesses in line with surging demand for electric vehicles.
According to the industry, China’s share of global production of basic oil results such as ethylene, propylene, and butadiene is expected to expand from 13 percent in 2007 to 38 percent in 2022. Even in general-purpose polymer products, China accounts for an average of 47 percent of production. This suggests that China is becoming more self-sufficient to support its own high demand. This explains why the Korean petrochemical industry has received limited benefits from a partial recovery in demand following China’s reopening.
A sense of crisis is growing in the Korean petrochemical industry as China’s influence grows. While the Korean petrochemical industry is expected to recover in the second half of the year, it is expected to see a improvement in performance halved due to China’s expansion of its self-sufficiency rate and production capacities. In response, major Korean petrochemical companies are promoting the addition of value to their product portfolios and investing in new businesses. In particular, they are expanding into advanced materials such as those for secondary batteries.
A case in point is Kolon Industries, which announced the expansion of production facilities for aramid and pure monomer resin (PMR). The Korean petrochemical giant recently announced that it will expand production of aramid pulp and PMR by investing 22 billion won (US$17 million) and 24 billion won (US$18 million), respectively.
Aramid is used in electric vehicle tires, 5G optical cables, bulletproof composite materials, and aerospace materials, while PMR, developed based on specialty technology, is used as a special additive in electric vehicle tires, electric cables, and sanitary materials.
In particular, in the case of aramid, Kolon Industries is in the process of doubling its aramid yarn production by the end of this year, and even before the expansion work is completed, Kolon Industries announced a plan to expand aramid pulp production. After the expansion of aramid yarn production, Kolon Industries expects to be able to sell the product full-scale sooner. Aramid pulp can be made by cutting aramid yarn and applying physical friction to it to turn it into crumbs.
LG Chem is also expanding its carbon nanotube (CNT) plant. CNTs are a material used in battery and semiconductor processes. When LG Chem completes the fourth plant, which it broke ground for on the day in Daesan, South Chungcheong Province, its CNT production capacity will swell to a total of 6,100 tons, more than double its current capacity. Previously, LG Chem’s third CNT plant in Yeosu, South Jeolla Province, with a capacity of 1,200 tons was recently put into operation.
CNTs have the same electrical and thermal conductivity as copper and diamond and are 100 times stronger than steel. They go into electric vehicle batteries and trays for semiconductor processes.
LG Chem set up the Nexolution and Sustainability Divisions within its petrochemicals business this year to foster specialty areas, and recently declared a vision to increase sales of battery materials six-fold from 4.7 trillion won (US$3.6 billion) in 2022 to 30 trillion won (US$22.7 billion) by 2030.
This year, Lotte Chemical launched the Battery Materials Division under Lee Young-joon, head of the advanced materials business. The company’s plan is to grow into a key player in a supply chain linking electric vehicles, batteries, and materials in preparation for growing demand for eco-friendly vehicles and the expansion of renewable energy.
To this end, Lotte Chemical plans to invest about 4 trillion won (US$3 billion) to achieve about 5 trillion won (US$3.8 billion) in sales in 2030. The company is currently building an organic solvent production facility for electric vehicle battery electrolyte in Daesan, South Chungcheong Province, with an investment of about 233 billion won (US$176 million).
Kumho Petrochemical is also ramping up production facilities for EV materials. By doing so, it aims to alleviate its pain in the deteriorating petrochemical industry. Its Synthetic Rubber Division is developing tires for electric vehicles, its synthetic resin division is developing high-strength synthetic resin products that contribute to developing lightweight bodies for electric vehicles, and its CNT division is working to develop CNT products as materials for secondary batteries.