South Korea Prioritizes Domestic Naphtha Supply

The South Korean government has implemented a total ban on naphtha exports to stabilize domestic supply. Previously, 11% of domestic naphtha production was exported. The move follows concerns that industrial production could halt due to shortages of plastics, chemical supplies, and medical items like syringes. The government has secured 2.73 million barrels of crude oil and 2.1 million tons of naphtha to mitigate the impact. Officials are also planning to support companies by subsidizing the price difference for naphtha imports through a supplementary budget. The naphtha supply represents one month of volume, while the crude oil covers more than three months. The government is considering expanding a ban on the hoarding of seven basic petroleum products, including ethylene and propylene produced in Patha. Regional economies are facing difficulties due to the prolonged disruption of crude oil supplies. Operating rates at Seokyo chemical plants have dropped significantly, leading to a collapse in sales for local businesses near the facilities. Supply instability has led to concerns that production could halt due to a lack of fabric and base materials. The measure aims to address supply instability and shortages of raw materials required for processing.