South Korea’s major Honam Petrochemical is not too concerned about competition posed by lower-cost polyolefins from the Middle East, as supply from that region is still comparatively small, as per ICIS. The company focuses on increasing its range of specialty products through consistent product development, rather than competing with lower-cost producers in the Middle East. Despite the aggressive expansion, the Middle East accounts for only 20% of the world’s polyolefin capacity, (hence) for Honam Petrochemical, it’s more important to compete with the other 80%. However, as polyolefin supply in Asia and the Middle East increases over the next few years, ‘fierce competition’ among major petrochemical companies will be ‘inevitable’, and Honam Petrochemical plans to keep up with the competition through first reinforcing the competitiveness of its existing facilities, and where possible, establishing new facilities that will be cost competitive. The petrochem major plans to expand its existing naphtha cracker and build new polyolefins facilities in Yeosu, South Korea and is in talks to invest in a petrochemical joint venture in Uzbekistan.
China would remain one of Honam Petrochemical’s key markets due to its geographical proximity and huge market size, but the producer was also looking to diversify including expanding its share in the Americas. Besides tapping the potential of the South American PE and PP market, Korean producers will also look to explore the US. Lack of capacity additions and scrapping of worn-out facilities in the US in the recent years could pave the way for more polyolefins exports to the US.