21/08/2025

BIZ & FINANCE THURSDAY | AUG 21, 2025 17 S. Korean petrochemical firms to cut capacity, restructure

SEOUL: Korean petrochemical firms have agreed to restructure their operations, including large cuts to their naphtha-cracking capacity, government officials said yesterday. The government has been putting pressure on a petrochemical sector it says is in “crisis” to speed up restructuring to boost efficiency and raise flagging margins. Executives from the companies signed an industry-wide agreement for restructuring at a meeting attended by the Minister of Trade, Industry and Energy Kim Jung-kwan. The companies have agreed to reduce their annual naphtha-cracking capacity by between 2.7 million and 3.7 million metric tons, the Industry Ministry said. That would mean shutting down as much as 25% of the country’s annual capacity, according to Reuters calculations based on total capacity of 14.7 million tons. The companies will need to submit an outline on how the cuts will be done by the end of the year, the ministry said. “The key for overcoming this crisis is clear – reducing capacity and restoring fundamental competitiveness,” Finance Minister Koo Yun-cheol said. The petrochemical industry made a mistake by allowing overcapacity and failing to shift to making higher-value products, he said. Ten South

affected by the restructuring could also be eligible for subsidies or loans. Margins have plunged for petrochemical companies in South Korea and across the globe due to an oversupply of products caused by relentless capacity additions in the last decade, particularly in China, the world’s biggest petrochemical market. Demand has also been sluggish over the last four years. Analysts do not expect global petrochemical margins to recover before 2027. Korea’s exports of petrochemical products stood at US$21.7 billion in the first half of this year, down 11.1% from a year earlier, amid price declines and global oversupply. Total exports of petrochemical products were US$48 billion in 2024, accounting for 7% of South Korea’s total exports and a top-five export item after semiconductors, automobiles, machinery and petroleum products. – Reuters

Chemical and Hanwha Solutions, has not responded to requests for comment. Chua Sok Peng, LSEG lead analyst for LPG and petrochemicals, also echoed that restructuring should “not be that tough, since everyone knows they need to do it in order to survive the overcapacity crisis”. The last major restructuring for South Korea’s petrochemical industry was in 1999 during the Asian Financial Crisis, when YNCC was formed. The Korean government has set three goals for the restructuring, reducing overcapacity and facilities, improving finances at companies and minimising the impact on local economies and jobs, the Industry Ministry said in a statement yesterday. The government will seek to restructure three industrial complexes in the country simultaneously and offer a package of comprehensive support for the industry, it said. Communities in areas potentially

Hwang Kyu-won, an analyst at Yuanta Securities Korea, said the fact that the government was leading the plan and was linking financial support to restructuring meant companies would not be able to avoid pressure to take action. “The targets should be debt ridden companies or those running very old facilities. The government may pressure them to merge with each other,” said Hwang. South Korea’s leading petrochemical companies include LG Chem, which is the top producer of ethylene and propylene, as well as GS Caltex, Lotte Chemical, Hanwha TotalEnergies, S-Oil and HD Hyundai Chemical . There have been particular concerns over the financial health of South Korea’s Yeochun NCC Co (YNCC), a loss-making petrochemical maker that media say faces 180 billion won (RM549 million) in loans coming due in August. YNCC, a joint venture between DL

o Govt to ease regulations and offer financial support The government will ease regulations and offer financial and taxation support for companies that sincerely make efforts to rescue themselves, he said. Authorities would not tolerate any “free riders” expecting government aid without trying to restructure, Koo said. South Korea is one of the world’s largest importers of naphtha, an oil product that is broken down into chemicals used in plastics for automobiles, electronics, clothing and construction. If the country is forced to cut capacity, it could impact global oil markets.

HKEX posts record revenue on listing boom HONG KONG: Hong Kong’s stock exchange operator reported its best-ever half-year revenue yesterday, bolstered by a surge in initial public offerings and trading activity. The Chinese finance hub has weathered a prolonged slump in IPOs since 2020, with many major firms putting their listing plans on hold in light of a regulatory crackdown by Beijing. But analysts are expecting Hong Kong to reclaim the crown this year as more and more Chinese companies pivot to list in the city amid broader geopolitical tensions. Hong Kong Exchanges and Clearing (HKEX) on Wednesday reported a revenue record of HK$14.1 billion (RM7.6 billion) for the first half of 2025, up 33% from the same period last year. Profit attributable to shareholders rose 39% to HK$8.52 billion, the statement said. It added that the average daily turnover from trading of equity products during the period was HK$222.8 billion, up 122% on-year. The bourse attributed the strong results to renewed investor interest in China-related assets, which is driven by optimism in the country’s economic outlook and supportive policies, as well as developments in artificial intelligence. HKEX chairman Carlson Tong warned that despite “tariffs, geopolitical risks and interest rate fluctuations”, he was “cautiously optimistic about the outlook for the second half of the year”. This year’s surge in IPOs was “reinforcing Hong Kong as a listing venue of choice for issuers seeking to raise funds from both mainland and international investors”, Tong said. Contributing to the buzz in Hong Kong’s capital markets have been several blockbuster listings by Chinese companies, including battery giant CATL, pharmaceutical firm Jiangsu Hengrui and soy sauce maker Foshan Haitian. The exchange saw 44 new listings during the first half of the year that raised a total of HK$109.4 billion, up 716% year-on-year. And HKEX is processing more than 200 listing applications, its database shows. In early August, HKEX eased some of its IPO rules for China-listed companies seeking to raise overseas capital in Hong Kong, including by lowering the minimum public float requirement. – AFP

Robots deployed for Fukushima radioactive debris removal TOKYO: Japanese technicians at the stricken Fukushima nuclear plant have sent in remote-controlled robots to one of the damaged reactor buildings as part of preparations to remove radioactive debris. Dangerously high radiation levels mean that removing melted fuel and other debris from the plant hit by a huge tsunami in 2011 is seen as the most daunting challenge in the decades-long decommissioning project. the world’s worst nuclear accidents after a tsunami triggered by a 9.0-magnitude earthquake in 2011. A spokesman for plant operator Tepco told AFP that the company had deployed two robots – “Spot” and “Packbot” – at one of the damaged reactor buildings on Tuesday to measure the level of radiation. used to help decide upon “a full-scale fuel debris retrieval method”, TEPCO said in a press release. Public broadcaster NHK and other local media reported that the survey would continue for about a month. Tiny samples of radioactive material have twice been collected under a trial project using special tools, but full-fledged extractions are yet to take place. The samples have been delivered to a research lab for analysis. – AFP Around 880 tonnes of hazardous material remain inside the power station, site of one of Both are equipped with dosimeters, a device used to measure radiation, and “Spot” – which resembles a dog – has a camera. The results of the investigation would be

Tourists walking down a street near Yasaka Pagoda during a visit to the Japanese city of Kyoto. – AFPPIC

Japan tourism arrivals hit record despite bad weather, quake fears TOKYO: Japan’s tourism boom continued in July, with record arrivals for the month despite a steep drop in visitors from Hong Kong due to typhoon-related flight disruption and jitters about possible earthquakes, the tourism board said yesterday. number for any July, the Japan National Tourism Organisation (JNTO) said. During the month, the number of visitors from Hong Kong fell 36.9% and arrivals from South Korea dropped 10.4%, which contributed to the slowest monthly growth in arrivals so far this year, the data showed. Kong and social media chatter over recent earthquakes, which affected travel sentiment from both markets, according to the JNTO. A persistently weak yen, however, continued to fuel growth from other key markets, offsetting some of the decline.

Visitors from mainland China jumped 25.5%, while arrivals from the US rose by 10.3%. – Reuters

Arrivals of foreign visitors for business and leisure reached 3.43 million, a 4.4% increase from the same month last year and the highest

Contributing factors included typhoon related flight disruptions impacting Hong