In response to the government ordering restructuring in the petrochemical industry, Huh Soo-young, chairman of the Korea Petrochemical Industry Association and CEO of Lotte Chemical, said, “The government should play a role as a supporter, while companies should voluntarily reorganize businesses.” He also strongly denied rumors about the merger based on Hanwha, related to purified terephthalic acid (PTA) restructuring.
At a press conference held at Lotte Hotel in Sogong-dong, Seoul, on Oct. 15, Huh said, “It is generally right that there is a need for restructuring. However, Lotte and Hyosung didn’t discuss about selling the PTA business to Hanwha, and it is not that easy to do so.” PTA is one of the petrochemical products that experience supply excess due to the rapid extension of China’s production facilities from 2012. It is widely used to produce synthetic fibers and polyethylene terephthalate (PET) bottles.
Huh said, “Every company has different circumstances and its own strengths and weaknesses. Lotte Chemical has the vertical systematization of raw materials from mixed xylene, para-xylene, PTA, PET to high-value added purified isophthalic acid. According to an internal investigation, the company excels more than other companies in comprehensive profitability.”
Before the 2000s, market conditions were good due to exports to China, the largest market in the world. However, the country has become the “ugly duckling,” as China raised its self-sufficiency rates. Low-priced PTA from China has poured into the market, and the market condition is in bad shape to such an extent that the price of products is lower than the price of raw materials. Even Chinese leading companies are shutting down PTA production facilities due to accumulated deficits. Previously, China extended its PTA production capacity to 12 million tons in 2012. It means that the country increased the production capacity to twice that of Korea’s total production capacity of 6.5 million tons a year.