Kumho Petrochemical has sold its entire stake in the SB latex business, a joint venture with Rizhao Jinhu Jinma Chemical Co., Ltd., a Chinese company. The decision to exit the local business was made in response to China’s low-cost competition and overlapping environmental regulations.
According to the Financial Supervisory Service’s electronic disclosure on March 15, Kumho Petrochemical sold its 50% stake in China’s Yizhou Kumho Golden Ma Chemical Co., Ltd. in February.
The joint venture, which completed a factory in China in 2009, has been producing latex used in paper coating materials, tire manufacturing, and asphalt modifiers. It has an annual production capacity of 150,000 tons and recorded an operating profit of 1.8 billion won last year. This marks a decline of over 80% compared to the previous year’s operating profit of 9.2 billion won.
Since 2021, China has been operating a carbon emission trading system that sets a cap on emissions for the power generation sector, with plans to expand this to eight industries, including petrochemicals, starting next year.
An industry insider commented, “The profitability of domestic petrochemical companies is deteriorating due to China’s low-cost competition and poor business conditions. The addition of environmental regulations means that a reduction in China-related businesses is inevitable.”