Top ethylene maker doubles down on investment

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Top ethylene maker doubles down on investment


LG Chem announced Sunday that it would spend 287 billion won ($253 million) through 2019 to boost production capacity at its naphtha cracking center in Daesan, South Chungcheong, to 1.27 million tons per year from 1.04 million tons.

The facility processes naphtha derived from crude oil at high temperatures to produce basic petrochemical materials such as ethylene. The added capacity is set to pump up the chemical company’s annual revenue by more than 400 billion won and make the factory the world’s largest supplier.

As the nation’s top producer of ethylene, the chemical unit of LG has already churned out 1.16 million tons of the material total at its factory in Yeosu, South Jeolla.

The plan to expand the Daesan center comes after the Korean government said in a recent report that local naphtha cracking facilities need to enlarge their production capacity to enhance the nation’s petrochemical industry competitiveness. Global demand for ethylene has been on the rise, but the number of suppliers has shrunk recently to a few global producers in Asia.

LG Chem said it would also devote one of two polystyrene production lines within its Yeosu plant to acrylonitrile butadiene styrene (ABS), a high-value specialty material, by the first half next year. Polystyrene has been facing oversupply.

Characterized by resistance to chemicals, heat and impact, ABS is mostly used for preproduction prototypes, automobiles and tech products. LG Chem is the world’s No. 1 producer, accounting for a fifth of global supply.

When the line switch process is complete, LG Chem’s annual polystyrene production capacity will shrink from 100,000 tons to 50,000 tons, while ABS production will increase 30,000 tons to 880,000 tons a year.

“Ramping up cost competitiveness and refining the business structure is very crucial to sustaining the local petrochemical industry,” said Son Ok-dong, president of the company’s basic chemical materials unit.

BY SEO JI-EUN [seo.jieun@joongang.co.kr]

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