LG Chem plans to boost the sales of high-value products in their basic materials business from the current 3 trillion won (US$2.69 billion) to 7 trillion won (US$6.28 billion) by 2020. The move has come amid expectations the nation's petrochemical industry will face fiercer competition with China, strengthening its status as a global leading firm.
LG Chem announced on August 28 that it will increase the sales of high-value petrochemical products – metallocene polyolefin (PO); highly-functional acrylonitrile, butadiene and styrene (ABS); engineering plastic (EP); super-absorbent polymers (SAP); and eco-friendly synthetic rubber – to 7 trillion won (US$6.28 billion) by 2020, up from the current 3 trillion won (US$2.69 billion) level. Higher value-added products refer products that can be produced only by global leading firms with differentiated technology has a much higher profitability than general products.
Based on the “technology for metallocene based catalyst and process,” which was independently developed by the company for the first time in the domestic industry, LG Chem will raise the production of high-value PO products from the current 30 percent to 60 percent by 2020 first. The technology can dramatically improve the functions of existing products, such as polyethylene (PE) and polypropylene (PP), creating higher values. To this end, LG Chem will not only change the existing general production lines to metallocene product manufacturing lines but also establish additional lines. As part of the plan, it will invest 400 billion won (US$358.81 million) by 2018 in order to boost the production capability of synthetic resins called elastomers to 290,000 tons.
LG Chem will also aggressively promote the business of highly-functional ABS and EP products that are used in automobiles and information technology (IT) materials. In a bid to consolidate the current number one position in the global ABS market, the company plans to expand the production output at the Huanan ABS plant in China from the current 150,000 tons to 300,000 tons. It will also seek to develop new products and acquire businesses with promising technologies to strengthen the competitiveness in the EP sector.
In addition, LG Chem will jointly develop next-generation products with global clients to maintain the market leadership in the SAP sector, which is used to produce disposable diapers, and restructure its business portfolio focusing on eco-friendly products in the synthetic rubber sector.
In order to brace for the future, the company will also actively develop new promising materials, such as super engineering plastic, which can significantly reduce the weight of vehicles, and carbon nanotube (CNT), which is applicable to various smart devices due to its high conductivity. To this end, it plans to expand its R&D investment in the basic materials business by more than 10 percent every year.
For existing businesses, LG Chem will focus on maximizing the productivity. The company plans to boost the price competitiveness in the Naphtha Cracking Center (NCC) that produces basic petrochemical materials, including ethylene and propylene. In particular, it is considering expanding production of ethylene to stably supply high-value petrochemicals. It currently has the nation’s largest ethylene production capability of 2.2 million a year – 1.16 million tons at the Yeosu plant and 1.04 million tons at the Daesan plant.