Boston, MA -- (ReleaseWire) -- 02/07/2014 -- The South Korean petrochemicals market will suffer from weak growth in automotive, construction and retail segments, according to BMI's latest South Korea Petrochemicals Report. Korean petrochemicals production will therefore depend on exports, which should be shored up by the country's trade deal with China that gives it an advantage over competitors like Taiwan and should help absorb the large increases in Korean aromatics capacities in the years ahead. However, the US's surge in petrochemicals growth based on rising shale gas exploitation will pose a major challenge to Korea's naphtha-fed industry, leading to a potential squeeze in margins.
South Korea's petrochemical industry is mature and highly integrated, although the country lacks significant oil and gas reserves. In 2013, combined olefins capacities included 8.08mntpa ethylene, 6.61mntpa propylene and 1.25mn tpa butadiene. Intermediate and aromatics capacities included 4.35mn tpa benzene, 330,000tpa ethylbenzene, 1.3mntpa ethylene oxide/ethylene glycol, 6.63mntpa terephthalic acid, 3.28mntpa styrene monomer, 1.51mntpa VCM and 8.2mntpa xylenes. Polymer capacities include 2.17mntpa HDPE, 1.03mntpa LDPE, 1.22mntpa LLDPE, 1.09mntpa PET, 4.24mntpa PP, 1.38mn tpa PVC and 975,000tpa PS.
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It also possesses capacities of 565,000tpa styrene-butadiene rubber and 1.48mntpa acrylonitrile-butadienestyrene.
- Xylenes capacity set to reach 10.5mntpa by 2018, 6mntpa more than seen in 2010. Xylenes are an important aspect of Korea's expansion efforts as the country's petrochemicals producers seek to take advantage of demand from Chinese PET producers.
- South Korea is a major exporter of ethylene and propylene in Asia. BMI expects another surge in monomer exports in 2015 when Hyosung Corporation adds 300,000tpa of propylene capacity to its Ulsan plant. It is being expanded to take advantage of the effect rapid development of shale gas will have on the price of propane feed. The plant will also improve access to feedstock by polypropylene producers.
- South Korea's score has fallen 0.4 points from 2013 to 81.0 points as a result of deteriorating market risk, but has kept its top ranking with its lead over China in BMI's Asia Petrochemicals Risk/ Reward Rankings, narrowing slightly by 0.2 points to 0.7 points. Market risk has declined due to the Korean petrochemicals industry's increasingly difficult external environment over the medium-term with US ethane-based capacities likely to lead to over-supply in the regional market.
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