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S. Korean Petrochemical Companies, Oil Refineries Rushing to Expand Ethylene Production
Amid Concerns about Oversupply
S. Korean Petrochemical Companies, Oil Refineries Rushing to Expand Ethylene Production
  • By Jung Min-hee
  • September 5, 2018, 10:51
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Korean oil refineries and chemical manufacturers are rushing to expand ethylene production amid concerns about an oversupply.

Domestic oil refineries and chemical manufacturers are rushing to increase their ethylene production capacity. The move is based on a forecast that demand for ethylene will be strong in the years to come, but massive facility expansion is causing concerns about oversupply.


According to industry watchers on September 4, domestic ethylene production is expected to increase from approximately 9 million tons a year at present to 13.8 million tons five years later, an increase of more than 50%.

The most striking is S-OIL’s plan to build new facilities. The company is conducting a feasibility study to build a facility with an annual production capacity 1.5 million tons at its Onsan plant in Ulsan by 2023. If the project, which will cost more than 5 trillion won, proceeds as scheduled, S-OIL will have the fourth largest ethylene production capacity in South Korea.

Yeochun NCC also plans to increase its yearly ethylene production from the current 1.95 million tons to 2.285 million tons.

LG Chem has announced it would increase the ethylene production capacity of its Yeosu and Daesan plants by 800,000 tons and 300,000 tons, respectively, by 2021.

Lotte Chemical is also in the process of expanding Yeosu NCC’s capacity by 200,000 tons and is building an ethanol cracking facility (ECC) in Louisiana, the United States. When the US ECC facility goes into operation, the company’s total yearly ethylene production will reach 4.5 million tons.

GS Caltex is also planning to build a facility with an annual ethylene production capacity of 700,000 tons by 2021, while Hyundai Oilbank will work with Lotte Chemical to set up a facility that can produce 750,000 tons of ethylene.

Hanwha Total also is also expanding its Daesan plant by 310,000 tons a year. The expansion work is scheduled to be completed next year.

Domestic oil refineries and chemical manufacturers are increasing their ethylene production facilities as they have secured funds during the boom in recent years. They are also motivated by the positive outlook for the petrochemical market.

Ethylene is called “the rice of the petrochemical industry” in Korea as it is a key basic raw material for making a host of chemical products.

Meanwhile, the industry’s push for ethylene production has spawned concerns about an oversupply around 2020, when most of the planned facilities are completed.

An industry source said, "Ethylene production facilities are being built not just in Korea but in other countries in Asia,” adding, "ECC products manufactured in North America are not still imported to Asia, but they will soon flow into the region."

Petrochemical companies that have been producing ethylene have advantages in terms of facility operation compared with oil refiners that have jumped into ethylene production. But oil refiners can directly secure naphtha, the raw material for ethylene production.

As competition in the petrochemical industry is intensifying with the participation of oil refiners in ethylene production, petrochemical companies are under pressure to develop high-value products and expand their production capacity.