Journalist
Lee Nak-yeon
nakk@ajunews.com
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Naphtha Surge Triggers Negative Margins for South Korea Petrochemical Makers in Rare Price Inversion Rising naphtha prices driven by Middle East geopolitical risks have pushed South Korea’s petrochemical industry into a “negative margin shock,” with feedstock costs overtaking product prices and losses mounting the more companies produce. The price inversion — naphtha above ethylene — is the first since the oil shocks of the 1970s. Industry officials said naphtha has climbed sharply since the Iran situation. Based on Japan’s import price on a C&F basis, a key benchmark for domestic pricing, naphtha rose from about $557 per ton in January to $785 as of March 9, a jump of about 41% in a little over two months. Ethylene, meanwhile, fell to $663.75 per ton in March from about $800 in September last year, a decline attributed to weaker demand amid a global economic slowdown. Profitability in petrochemicals largely depends on the gap between naphtha and ethylene prices. Ethylene is a basic building block for widely used products such as plastics, fibers and film. Companies refine naphtha derived from crude oil into ethylene for sale, and the industry says an ethylene spread of at least $250 is generally needed to turn a profit. Recently, however, supply concerns tied to the Iran war have lifted feedstock costs above product prices, creating a negative-margin structure. Companies say they are struggling to raise prices for ethylene and other products because demand remains weak and supply is excessive, even as naphtha costs surge. The squeeze is also hitting operating rates. Major naphtha cracking centers (NCCs) including those run by LG Chem, Daehan Oil Chemical and GS Caltex are known to be cutting runs. Some companies’ average operating rates have fallen into the 50% range, down from 80% to 90% just a few years ago. Companies say it is difficult to halt NCC operations outright because the ethylene process also produces other chemicals such as butadiene and propylene. They say they must keep plants running at a minimum level, even at a loss, to supply certain products. Concerns are also growing that management burdens will rise further as the government pushes an NCC restructuring policy. The government said it is closely monitoring developments in the Middle East and will respond flexibly. The Ministry of Trade, Industry and Energy said it has no immediate plan to convene a meeting of petrochemical company CEOs, but is checking conditions through frequent communication with the industry. A ministry official said the government is in daily contact with petrochemical companies to assess on-the-ground conditions and is weighing response steps while watching Middle East developments and feedstock price swings. Trade, Industry and Energy Minister Kim Jeong-gwan told reporters on March 8 that petrochemical companies affiliated with refiners have relatively more room, but firms with petrochemicals-centered structures such as Yeochun NCC could face a bigger impact. He said the government would soon prepare and announce measures related to naphtha supply and demand. 2026-03-10 18:06:43 -
SK Inc. to Cancel All Treasury Shares Worth 4.8 Trillion Won SK Inc. said it will cancel treasury shares worth 4.8 trillion won, the largest such move ever by a holding company and equal to about 20% of its shares outstanding. The company said the decision is part of an aggressive effort to boost corporate value and maximize shareholder value in line with the intent of revisions to the Commercial Act. SK Inc. said it decided at a board meeting on Monday to cancel all treasury shares it holds except those reserved for employee compensation. The cancellation covers about 14.69 million shares out of roughly 17.98 million treasury shares, the company said in a regulatory filing. Based on the previous day’s closing prices — 329,000 won for common shares and 237,500 won for preferred shares — the canceled shares are valued at 4.8343 trillion won, it said. The shares to be canceled include not only treasury shares bought to enhance shareholder value but also shares acquired for a “specific purpose” during past efforts to improve the holding company’s governance structure. SK Inc. merged with SK C&C (now SK AX) in 2015 to simplify its structure and increase transparency. “After several rounds of in-depth discussion, the board concluded that canceling all treasury shares is the best option to serve the maximum interests of all shareholders and raise corporate value,” an SK Inc. official said. The official said the company “actively reflected” the intent of the Commercial Act revision, which allows the board to cancel treasury shares acquired for a specific purpose. SK Inc. said the decision also reflects improved financial strength after two years of portfolio rebalancing. On a separate financial statement basis, net borrowings fell to 8.4 trillion won as of the third quarter of 2025 from 10.5 trillion won at the end of 2024, it said. Over the same period, the debt ratio improved to 77.4% from 86.3%. Canceling nearly 5 trillion won worth of treasury shares shows the board’s firm commitment to continue transparent, shareholder-friendly management and set a model precedent for South Korea’s capital markets, the official said. The company will keep strengthening shareholder trust and maintain a management approach that puts shareholders first, the official added. * This article has been translated by AI. 2026-03-10 17:09:19 -
Samsung Heavy secures new order for three crude oil tankers SEOUL, March 10 (AJP) - Samsung Heavy Industries has won an order for three crude oil tankers from a Bermuda-based shipowner, the shipbuilder said on Tuesday. The order, worth 400.1 billion Korean won (about US$290 million), is scheduled for delivery by February 2029. The deal brings the shipbuilder's cumulative orders for this year to 11 vessels worth $2.1 billion, reaching 15 percent of its annual target of $13.9 billion. By ship type, the orders consist of three liquefied natural gas carriers, two ethane carriers, two container ships, and four crude oil tankers. "With an order backlog of 137 ships worth $29.5 billion, we will continue to focus on profitability in securing new projects," a company spokesman said. 2026-03-10 15:05:07 -
Kolon Industries wins CDP Korea Awards carbon management sector honors Kolon Industries said March 10 it won the Carbon Management Sector Honors award at the 2025 CDP Korea Awards, hosted by CDP, a global sustainability assessment organization. CDP, formerly known as the Carbon Disclosure Project, is a global nonprofit that collects and evaluates disclosures from major companies and cities on climate strategies, greenhouse gas reduction efforts, and water and forest-related information. Its assessments are widely used by ESG investors, financial institutions and global supply-chain companies in decision-making. Kolon Industries previously received an A, the top grade, in the “2025 CDP Climate Change” assessment announced in February. The company has submitted climate-change performance data since 2017, and in the latest assessment it moved up two levels to A from B. The company cited factors behind the upgrade including approval of its SBTi net-zero target, adoption of an internal carbon price, climate scenario analysis based on physical and transition risks, and expanded third-party verification of Scope 1, 2 and 3 greenhouse gas emissions. It also submitted its first response to the water module last year and received an A- grade, and said it plans to strengthen its water management system in stages in line with its climate strategy. “This award recognizes that our carbon management strategy has taken root as a performance-driven execution system,” a Kolon Industries official said. The official said the company will boost emissions-reduction execution by expanding renewable energy adoption based on its net-zero roadmap, while strengthening sustainability management across its supply chain to build stakeholder trust.* This article has been translated by AI. 2026-03-10 14:09:17 -
Samsung Heavy Wins $400 Million Order for Three Crude Oil Tankers Samsung Heavy Industries said in a regulatory filing on the 10th that it has won an order worth 400.1 billion won for three crude oil tankers from a Bermuda-based shipowner. The vessels are scheduled for delivery by February 2029. With the deal, the company’s year-to-date orders total 11 ships worth $2.1 billion, reaching 15% of its annual target of $13.9 billion. By vessel type, the orders include three liquefied natural gas (LNG) carriers, two ethane carriers, two container ships and four crude oil tankers. A Samsung Heavy official said the company’s order backlog stands at 137 ships worth $29.5 billion, adding that it will continue to focus on profitability in winning new business. * This article has been translated by AI. 2026-03-10 14:03:04
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Diesel Prices in South Korea Top Gasoline, Raising Alarm for Transport Industries International oil prices have surged, pushing diesel — often seen as a working-class fuel — above gasoline in South Korea and raising alarms across industry. With the economy slowing and business conditions already weak, higher energy costs are expected to make it harder for transport-heavy sectors such as logistics, shipping, rail and aviation to protect earnings. According to Opinet, the Korea National Oil Corp.’s price information system, the nationwide average gasoline price at gas stations stood at 1,900.7 won per liter as of 1:30 p.m. Monday, up 5.3 won from the previous day. Diesel rose 6.1 won to 1,923.8 won per liter, overtaking gasoline. Since March 4, when the Middle East war intensified, gasoline has climbed 160.83 won per liter while diesel has jumped 264.45 won. It was the first time diesel exceeded gasoline since February 2023, about three years ago. Diesel typically trades below gasoline because taxes are lower due to heavy industrial use and its pricing tends to be more stable. But the war has increased uncertainty over diesel supply. When geopolitical risks rise, supply can tighten while demand is slow to fall. Diesel is widely used across the economy, including in freight trucks and buses, ships, construction equipment and generators. It is also used to power combat equipment such as tanks, armored vehicles and military trucks, keeping demand elevated. Rising diesel prices can ripple through industry, with logistics firms among the most exposed because fuel accounts for a large share of costs. In aviation, companies are said to be reviewing measures including raising fuel surcharges. Korean Air carries out oil-price hedging for up to 50% of its expected annual fuel consumption and plans to adjust its response as it monitors global oil trends. Low-cost carriers, which rely more heavily on passenger revenue than large airlines that can offset losses with air cargo, could see already weak results deteriorate further. Rail operators also face pressure because fares are directly managed by the government, making it difficult to quickly pass higher fuel costs on to customers. Shipping companies are also on alert, focusing on whether higher oil prices will reduce cargo volumes. They can reflect some fuel costs in freight rates through bunker adjustment factors, but if high oil prices weaken global consumption, export and import volumes could fall. Even industries not directly tied to oil face broader cost pressure. Export-heavy sectors such as semiconductors, automobiles and PCs are concerned about higher logistics costs and transport disruptions. If a prolonged war pushes up shipping and airfreight rates enough to be reflected in product prices, demand could weaken. Automakers also expect high oil prices could slightly dampen consumer sentiment for internal combustion vehicles. While hybrids and electric vehicles are taking a larger share, internal combustion models still account for about half of new-car sales in South Korea, making the sector vulnerable. “Rising fuel costs can affect not only corporate expenses across industry but also consumer prices,” an industry official said. “Policy responses are needed to cushion the shock from a sharp rise in energy prices.”* This article has been translated by AI. 2026-03-09 18:13:12 -
Yeocheon NCC Declares Force Majeure as Hormuz Disruption Hits Naphtha Supply U.S. and Israeli airstrikes on Iran have heightened tensions in the Middle East, sending shock waves through South Korea’s petrochemical industry. With disruptions in naphtha feedstock supply after the closure of the Strait of Hormuz, Yeocheon NCC has declared force majeure, raising concerns among domestic companies that rely on its ethylene supplies. Industry officials and foreign media reported on Thursday that Yeocheon NCC notified major customers on March 4 that product deliveries could be delayed or adjusted and declared force majeure after it could no longer secure naphtha due to the Hormuz closure. The move followed a halt in imports of Middle East-origin naphtha, including from Saudi Arabia, amid the impact of Iran’s drone attacks and the strait’s shutdown. Yeocheon NCC is a joint venture of Hanwha Solutions and DL Chemical and is South Korea’s largest single ethylene production hub, with annual capacity of 2.285 million tons. As restructuring continues across the sector, its third plant has been shut down, leaving only Plants 1 and 2 operating. Hanwha Solutions confirmed reports of the force majeure declaration. The company was reported to have told some customers that contract performance could be temporarily delayed or revised due to disruptions in Middle East naphtha supply following the outbreak of war between the United States and Iran. In a letter to customers, Yeocheon NCC said it was declaring force majeure because the Middle East crisis had disrupted feedstock supply. It said it had no choice but to run all production facilities at minimum capacity starting March 4, outlining plans to cut operating rates. “As geopolitical tensions in the Middle East have suddenly and sharply escalated, we are experiencing severe disruptions in raw material procurement,” it said, adding that the Hormuz closure had significantly delayed the arrival of naphtha feedstock scheduled for delivery in March. Naphtha prices have risen more than 20% since the crisis began. Force majeure is a contract clause that can exempt a seller from liability when performance becomes difficult due to events beyond its control, such as natural disasters or war. The declaration is expected to directly affect Hanwha Solutions and DL Chemical, Yeocheon NCC’s major shareholders and key customers. Yeocheon NCC has supplied the two companies with ethylene and other basic feedstocks through pipelines. For ethylene, it supplies 1.4 million tons a year to Hanwha Solutions and 735,000 tons a year to DL Chemical. Analysts said the situation could worsen if the disruption drags on and inventories run down. NICE Credit Rating said that, considering cargoes shipped before late February and existing stockpiles, major domestic naphtha cracking centers appear to have about one month of reserves. It said companies are likely to respond by lowering operating rates, adjusting maintenance schedules and securing alternative sources to manage supply uncertainty.* This article has been translated by AI. 2026-03-06 17:39:29 -
SeAH Steel Profit Plunges 74.3% in 2025 on Impact of High U.S. Tariffs SeAH Steel said its 2025 results deteriorated sharply as high U.S. steel tariffs hit earnings, with operating profit plunging more than 70%. According to SeAH Steel Holdings on Thursday, SeAH Steel’s separate financial statements showed 2025 revenue of 1.3721 trillion won, down 23.2% from a year earlier. Operating profit fell 74.3% to 51.9 billion won, and net profit dropped 68.0% to 41.6 billion won. The company cited high U.S. tariffs as a key driver. With construction slowing and steel demand weakening, the spread of U.S. protectionism increased tariff burdens, sharply hurting both sales volume and profitability. SeAH Steel is heavily exposed to the U.S. market. Exports to the United States account for about 30% to 38% of total revenue, among the highest shares for South Korean steelmakers. The company relies on demand for energy-industry steel pipes such as oil country tubular goods, or OCTG, and pipeline products, selling through its local distribution unit, SSA (SeAH Steel America). That structure increases earnings volatility as U.S. energy investment and trade conditions shift. At the holding-company level, consolidated results were relatively steady. SeAH Steel Holdings posted 2025 consolidated revenue of 3.7596 trillion won, up 2.3% year over year, while operating profit slipped 2.7% to 205.8 billion won. The company said sales from its U.S. unit and overseas projects partly offset weakness in domestic operations. The company said it plans to strengthen a selective order strategy focused on profitability this year and increase the share of high value-added products. A SeAH Steel Holdings official said, “Despite uncertainty in global markets, demand for steel pipes in North America is expected to remain solid,” adding that the company will use its domestic and global manufacturing bases to meet that demand and deliver stable performance.* This article has been translated by AI. 2026-03-06 14:52:27 -
HD Hyundai Chairman Chung Ki-sun visits Philippines to expand economic cooperation Chung Ki-sun, chairman of HD Hyundai, visited the Philippines as part of a South Korean government economic delegation, seeking to deepen ties and expand economic cooperation between the two countries, the company said March 5. HD Hyundai said Chung paid tribute at a Korean War memorial, attended a Korea-Philippines business forum and inspected HD Hyundai Philippines Shipbuilding (HD Hyundai Philippines). On March 4, Chung visited the Korean War memorial at the National Heroes Cemetery in Manila and laid flowers. The Philippines was the first Asian country to organize a combat unit for the war and deployed the largest contingent, sending 7,420 troops, the company said. Earlier that morning, Chung attended the Korea-Philippines Business Forum, co-hosted by the Federation of Korean Industries and the Philippine Chamber of Commerce and Industry, where participants discussed detailed steps to expand bilateral economic cooperation. On March 5, Chung visited HD Hyundai Philippines in Subic Bay, touring a construction site for a new employee dormitory and the yard, and encouraging staff working there. Over lunch with local employees, he said, "I will take even more special care in areas such as housing, medical services and public safety so employees have no inconvenience," and added, "Above all, I ask that you put safety first and do your best in the work you have been entrusted with." HD Hyundai has continued business cooperation with the Philippines. HD Korea Shipbuilding & Offshore Engineering, the intermediate holding company for HD Hyundai's shipbuilding business, signed a lease in May 2024 with U.S.-based Cerberus Capital for part of a Philippine shipyard site and launched HD Hyundai Philippines. In September last year, HD Hyundai Philippines held a steel-cutting ceremony to begin building its first vessel, a 115,000-ton petrochemical product carrier. HD Hyundai Heavy Industries has won orders for a total of 12 naval vessels from the Philippines since 2016, the company said. In 2022, it established a local logistics support center and has been providing maintenance, repair and overhaul services for delivered ships, including frigates and patrol vessels. Chung said, "Beyond a simple business partnership with the Philippines, we have been serving as a key bridge to strengthen friendship between the Republic of Korea and the Philippines," adding, "We will continue to build deep trust with the Philippines with pride in representing Korea."* This article has been translated by AI. 2026-03-05 11:48:20 -
Young Poong to Review KZ Precision Shareholder Proposals, Plans to Put Legal Items to Vote Young Poong said Thursday it will closely review shareholder proposals submitted by KZ Precision, a related party of Korea Zinc Chairman Choi Yun-beom, ahead of its 75th annual general meeting and plans to place on the agenda any items that comply with relevant laws. The company said it has pursued its own governance reforms and shareholder-value measures, contrary to KZ Precision’s claims. It cited last year’s cancellation of 1,030,500 treasury shares, a 10-for-1 stock split aimed at lowering the entry barrier for small investors, and cash and stock dividends totaling 33.6 billion won. Young Poong also said it has reflected shareholder views in management, including appointing Jeon Young-jun as an outside director who serves on the audit committee after accepting a proposal from ordinary shareholders. Young Poong said it will maintain its shareholder-return stance this year. It plans to cancel all remaining 203,500 treasury shares in the first half, further reducing shares outstanding. The company said the move is intended to enhance shareholder value and reinforce its commitment to responsible management. It also said it will draw up a midterm roadmap for its dividend policy to improve predictability for shareholders and further refine its corporate value-up program. Young Poong said it will also accelerate governance-improvement efforts aimed at raising the corporate value of its key asset, Korea Zinc. The company said it believes Korea Zinc under Choi’s leadership continues to face concerns about potential damage to shareholder value, and it will do its utmost to normalize corporate value through sound governance and protect shareholder interests. Young Poong said it is working to strengthen competitiveness by restoring sales and improving profitability in its core smelting business, while continuing environmental investment to build an eco-friendly smelter. It said it will continue to focus on enhancing shareholder value based on responsible management and transparent decision-making. Separately, Young Poong said it filed a damages lawsuit on March 4 against KZ Precision and its Chairman Choi Chang-gyu and CEO Lee Han-seong, alleging they created the appearance of cross-shareholdings during a management control dispute at Korea Zinc and caused significant losses to Young Poong.* This article has been translated by AI. 2026-03-05 09:21:19