Lotte Chemical Announces Closure of PET and Petrochemical Facilities

On December 3, 2024, Lotte halted operations at its 400,000 tons/year EG facility—essential for PET resin production—and its 230,000 tons/year EOA facility. Earlier this year, the company also paused PET resin production lines in Yeosu and Ulsan, with a combined capacity of 520,000 tons/year, and there are currently no plans for a restart. As of 2023, South Korea's total PET resin capacity is approximately 1.5 million tons/year, with major producers including Lotte Chemical, SK Chemicals, and LG Chem.

During the 2024 anti-dumping investigation against China, analyses revealed a domestic supply surplus of over 200,000 tons of PET resin in South Korea. On October 17, 2024, the Korea Trade Commission issued a final affirmative ruling on anti-dumping duties for polyethylene glycol (IEG) with a viscosity of 78 mL/g or higher, imported from China, as well as for PET resin classified under tariff number 3907.61.0000. The commission recommended imposing five-year anti-dumping duties at rates of 7.00% and 7.98%, though the overall impact is expected to be limited.

The supply and demand structure of PET plastic chips restricts South Korea's willingness and ability to impose anti-dumping measures against Chinese polyester chips, especially since the country serves as a crucial transit hub for bottle-grade PET resin re-exports.

Historically, under Park Chung-hee's leadership, South Korea adopted an export-oriented industrialization strategy, establishing the chemical industry as a key pillar of its economy. Today, South Korea's role as a transit hub in international trade is increasingly significant, with a substantial volume of domestically produced PET resin being exported to Southeast Asia and beyond. However, the production halt by companies responsible for over one-third of the South Korea's PET resin capacity could have serious implications for both domestic supply and international trade.

Looking forward, demand for PET resin in South Korea is projected to grow at an annual rate of 3-5% in the coming years, primarily driven by the packaging needs of the beverage and cosmetics industries. Recent political changes in South Korea have also impacted the social order, and in the long term, corporate operations may face challenges due to significant accidents or political unrest, potentially prolonging recovery times for production capacity in the chemical sector.

Given the anticipated decrease in domestic PET resin supply alongside rising demand, South Korea, as a key player in the international PET resin market, will likely need to establish stable supply chains and seek international trade support from the Asia-Pacific region, particularly from China.

References

1. CHEMANALYST. nEWS(06-Dec-2024)|Korean Chemical Firms Scale Back Basic Chemicals Operations

2. Resource Wise(Dec 9, 2024)|Understanding the Global Polyester Chain

3. Argus Media(21/10/2024)|Korea to impose anti-dumping duty on Chinese PET resin