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Korean Petrochemical Companies Planning to Make Huge Investment
Petrochemical Investment
Korean Petrochemical Companies Planning to Make Huge Investment
  • By Jung Min-hee
  • May 4, 2017, 01:30
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Korean petrochemical companies are going to make an investment of approximately 10 trillion won (US$9 billion) in total this year, up more than 20% from a year ago.
Korean petrochemical companies are going to make an investment of approximately 10 trillion won (US$9 billion) in total this year, up more than 20% from a year ago.

 

It has been found that the four largest petrochemical companies in South Korea are planning to make an investment of approximately 10 trillion won (US$9 billion) in total this year, up more than 20% from a year ago.

Specifically, LG Chem’s capital expenditure for this year is estimated at 2.7 trillion won (US$2.4 billion). The amount was 1.9 trillion won (US$1.7 billion) last year. “My company’s average annual investment has been fixed at 3 trillion won (US$2.7 billion) for 2017 to 2019,” said LG Chem CFO Jung Ho-young. 1.7 trillion won (US$0.9 billion) is scheduled to go to its battery business and basic material business this year. In addition, an R&D investment of one trillion won is planned for its new businesses such as water treatment and biotechnology development.

The capital expenditure of Lotte Chemical, which posted a profit of 815.2 billion won (US$733 million) in the first quarter of this year, is expected to amount to 2 trillion won (UA$1.8 billion) this year. 120 billion won (US$10.8 million) is slated to go to its special synthetic rubber manufacturing facilities about to be completed in Yeosu, South Korea and 300 billion won (US$270 million) is to be invested in its ethylene manufacturing plant scheduled to be completed in the second half of this year in Malaysia. This company is planning to further increase its investment through the IPO of Lotte Chemical Titan in the country and is currently expanding its facilities in its ethylene cracking complex (ECC) in Yeosu in order to increase its production capacity from one million tons to 1.2 million tons. Moreover, its ECC construction project in Louisiana is planned to be completed in the second half of next year at an investment of 2.9 trillion won (US$2.6 billion).

Hanwha Chemical’s subsidiary Hanwha Total, in the meantime, recently decided to invest 500 billion won (US$450 million) to expand its naphtha cracking center (NCC) in the Daesan Petrochemical Complex. Furthermore, it is going to invest one trillion won in its adhesive manufacturing facilities and the like.

SK Innovation is planning to invest three trillion won this year and most of the amount is likely to go to SK Global Chemical, its subsidiary in the petrochemical industry, for restructuring of its business to revolve around chemical business. In this context, SK Global Chemical acquired Dow Chemical’s ethylene acrylic acid business for 420 billion won (US$378 million) in February this year.
 
“With a boom in the industry going on, the four companies’ cash on hand amounted to no less than seven trillion won to eight trillion won as of the end of last year,” said an industry source, adding, “It seems that the petrochemical companies are looking to spend it to prepare for the future and secure stable profits.”