Amid Concerns over Oversupply
The Hanwha Group is set to additionally invest 530 billion won (US$478.99 million) to expand its chemical facilities. The move comes amid growing concerns over an oversupply of petrochemical raw materials.
Hanwha Total Petrochemical Co. announced on Dec. 4 that it has decided to expand its Daesan integrated refining and petrochemical facility in South Chungcheong Province. Accordingly, the firm will increase its annual polypropylene (PP), ethylene and propylene capacity by nearly 400,000 tons, 150,000 tons and 40,000 tons, respectively. The total amount of investment is 530 billion won (US$478.99 million) and the expansion of the plant will be completed by the end of 2020.
Hanwha Total will first invest 380 billion won (US$343.43 million) to expand its PP plant producing high value-added products. When the expansion is completed, the company’s PP capacity will rise to 1.12 million tons per year, the highest in the nation. The global PP market is expected to grow 5 percent a year over the next five years.
Hanwha Total is also planning to invest 150 billion won (US$135.56 million) in its naphtha cracking center (NCC) to expand gas cracker. Based on this, the company is forecast to additionally produce ethylene by 150,000 tons and propylene by 40,000 tons per year.
Hanwha Total has continued to make such an aggressive investment from last year. The company decided to increase its annual ethylene capacity by 310,000 tons, propylene by 130,000 tons and PP by 400,000 tons last year with the investment of 900 billion won (US$813.38 million). With the latest investment plans, a total of 1.43 trillion won (US$1.29 billion) of investments will be made in the Daesan plant by the end of 2020. Considering the fact that Hanwha Total posted 1.46 trillion won (US$1.32 billion) in operating profit in 2016, the company spent most of its annual operating profit on the expansion of the production facility.
Hanwha Total also plans to introduce the smart factory system making use of big data and the Internet of Things (IoT) and strengthen the vertical integration ranging from processing raw materials to manufacturing finished products in a bid to maximize the operation efficiency. The synthetic resin production structure will be reorganized to maximize production of high value added products so that the company can expand its main business from the basic chemical sector, including styrene monomer (SM) and para-xylene (PX), to the synthetic resin sector.
With the latest investment, Hanwha Total will be able to raise its status in the group. Hanwha Total, which was incorporated into Hanwha Group through the big deal between Hanwha and Samsung in 2015, saw its operating profit surge from 795 billion won (US$718.48 million) in 2015 to 1.52 trillion won (US$1.37 billion) last year, emerging as one of the core subsidiaries in the group.