Minister warns oil industry leaders

Kim Young-ju, minister of commerce, industry and energy, recommended local petrochemical companies undergo voluntary restructuring yesterday. With major petrochemical product prices declining and global competition heating up, experts have repeatedly called on local petrochemical firms to undergo mergers and other restructuring. But this was the first time the government stepped in.
Kim met the chief executive officers of major petrochemical companies at the Plaza Hotel in central Seoul. He said at the meeting, “It is difficult to keep an optimistic outlook for Korea’s petrochemical industry, as demand inside and outside the country is now sluggish and local companies’ rivals in China and the Middle East are making challenges.
“It is urgently needed for local companies to secure specialties and to expand their scope through voluntary restructuring,” he said.
At the meeting were chief executives of 22 petrochemical companies, including Hur Won-joon of Hanwha Chemical Co., also chair of the Korea Petrochemical Industry Association; Kim Bahn-suk of LG Chem Ltd.; and Chong Bum-shick of Korea Kumho Petrochemical Co. They agreed with Commerce Minister Kim, but said that the antitrust rules at the Fair Trade Commission need to promote mergers and acquisitions.
According to the Commerce Ministry, Korea’s petrochemical industry posted a $13.7 billion trade surplus last year. But now they face challenges from companies based in the Middle East, where production costs are only one-third those of Korean companies. In addition, China, Korea’s largest export market for petrochemical products, is expanding production facilities to reduce its dependence on imports.
“The government will take measures to help local companies invest overseas, so that they can easily build production bases in Qatar, the United Arab Emirates and other countries with sufficient resources, saving production costs,” Commerce Minister Kim said.

By Moon So-young Staff Writer [symoon@joongang.co.kr]