[Exclusive] "Non-Competitive Facilities Must Be Phased Out"... Ulsan Petrochemical Industry Seeks Self-Rescue Measures Ahead of Restructuring

Industry Responds to Government's "No Free Riding" Declaration
Scaling Down General-Purpose Facilities and Strengthening Specialty Products Amid Chinese Competition
Kim Kihyun of People Power Party: "We Will Enact a Special Law for Petrochemical

The petrochemical industry, facing oversupply from China, has announced its intention to pursue voluntary restructuring. As the government called for "painful self-rescue efforts," declaring that "free riding will not be tolerated," industry voices have voluntarily stated that "non-competitive facilities must be phased out." On the afternoon of August 20, the government will announce a petrochemical restructuring plan that includes various incentives to encourage voluntary business reorganization within the industry. Observers expect that, once government support is combined, discussions on corporate-level restructuring will begin in earnest.

Major petrochemical companies located in the Ulsan Petrochemical Complex-Hyosung Chemical, Hanwha Solutions, SK Geocentric, Aekyung Chemical, and Taekwang Industrial-attended the "Petrochemical Industry in Crisis, Finding a Breakthrough" meeting at the FKI Tower in Yeouido, Seoul, on the 19th. At the meeting, they shared a "voluntary restructuring roadmap" that centers on reducing general-purpose product production lines and strengthening downstream and specialty sectors. Expressing this stance a day before the government’s Industrial Competitiveness Enhancement Ministers’ Meeting is seen as both aligning with policy direction and revealing a sense of urgency that "they can no longer endure."

Kim Kihyun, a member of the People Power Party, is speaking at the 'Finding a Breakthrough for the Crisis in the Petrochemical Industry' meeting held on the 19th at the FKI Tower in Yeouido, Seoul. Photo by Jo Yongjun

Participants unanimously agreed that facility reduction is inevitable to prevent the collapse of the industrial community. They believe that reducing production is the only solution to avoid the "triple pressures" of oversupply from China, domestic cost disadvantages, and the breakdown of the business cycle. Instead, the industry intends to shift its focus toward niche specialty products. In addition, the industry presented several minimum requirements for survival: blocking the influx of cheap Chinese products, expanding policy funds by more than 5 trillion won, easing burdens from electricity and logistics costs, and granting exemptions to cartel regulations under the Fair Trade Act. These are not simply requests for support, but demands for "essential infrastructure" from the government to execute restructuring.

Park Sungmin, a member of the People Power Party who co-hosted the meeting with Assemblyman Kim Kihyun, stated, "We will expand tax support to enhance companies’ investment capacity." Park plans to introduce a partial amendment to the Restriction of Special Taxation Act within this week, which will include strengthening investment tax credits and extending the application period for tax credits on research and development (R&D) investments.