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Korean Chemical Firms Responds to Growing US Trade Pressure via Localization
Localization Is the Way to Go
Korean Chemical Firms Responds to Growing US Trade Pressure via Localization
  • By Jung Min-hee
  • June 7, 2018, 11:14
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Korean chemical companies are proactively responding to the growing US protectionism with a localization strategy.
Korean chemical companies are proactively responding to the growing US protectionism with a localization strategy.

Korean chemical companies are responding to the growing trade pressure from the US government with localization strategies.

One example is Hanwha Q Cells Korea, which is planning to build a solar energy module plant in Whitfield County, Georgia. Hanwha is pushing to start construction of the plant this year. If work proceeds as planned, the module plant will have a capacity of 1.6GW, which is enough to meet the electricity demands of approximately 2.5 million people.

The large-scale plant is intended to avoid protectionist regulations imposed by the US government by securing a local production base.

In February this year, the US Department of Commerce put into effect safeguard tariffs of up to 30% on solar cell and solar module imports, dealing a huge blow to Korean solar energy companies.

Huvis Corporation is also pushing to establish a joint venture with Indorama Ventures of Thailand for production and sales of low melt fiber (LMF) in the US. Currently, the company is in discussion with its joint venture partner to complete construction of the planned plant by the second half of this year and begin production from next year.

The joint venture aims to produce 60,000 tons of LMF per year. LMF is used as an environment-friendly adhesive in creating high-value added industrial materials for items including padded jackets, insulators, filter and sound absorption interior material for automobiles.

Huvis Corporation’s move to establish a plant in the US is also intended to avoid the impact of trade protectionism. Huvis was charged a 0% tariff in preliminary evaluation of anti-dumping duties by the US Department of Commerce. However, as American companies are pushing to impose a dumping margin rate of up to 52% on Huvis, the tariff rate could change depending on the final decision.

In addition, Lotte Chemical is building an ethane cracker (grinding) plant with an annual production capacity of one million tons in Louisiana. The entire investment is estimated at US$3 billion, which is the biggest foreign direct investment in the US by a Korean petrochemical company. Lotte Chemical is planning to use the large-scale production plant in the US as a base for expanding its presence in the global market.