The factory operation rates of major petrochemical companies struggling due to oversupply from China have dropped in the first half of this year compared to last year. It is known that petrochemical plants must maintain an operation rate of over 80% to generate revenue, but some companies' rates have fallen to the 60% range.
A half-year report from major petrochemical companies on the 18th shows that LOTTE Chemical's operation rate for its naphtha cracking plant (NCC) is 64.4%, down 16.6 percentage points (P) from 81% during the same period last year. During the same period, the operation rates of polypropylene (PP) and polyethylene (PE) plants, used as raw materials for general plastic products, fell from 88.5% to 72.8% and from 88.8% to 71.7%, respectively.
LG CHEM's operation rate also decreased to 71.8%, down 6.2%P from last year's 78%. The operation rate for general products producing basic materials such as ethylene, PP, and PE fell from 83.4% last year to 81.3% in the first half of this year. The operation rate for specialty items used in advanced materials like cathode materials and separators also dropped from 65.9% to 49.0%.
The operation rate of Hanwha Solutions' chemical institutional sector has also decreased. The average operation rate of the chemical institutional sector producing basic materials like PVC slightly decreased from 99.6% last year to 99% at the Yeosu plant. The operation rate of the processed materials sector, producing automotive and solar materials, fell from 71% to 67.7%.
As the recession continues, the number of employees has also decreased. As of the end of the second quarter this year, LOTTE Chemical has 4,555 employees, LG CHEM has 13,674 employees, and Hanwha Solutions has 5,790 employees. Compared to the end of last year, LOTTE Chemical reduced its workforce by 209 employees, LG CHEM by 183 employees, and Hanwha Solutions by 120 employees.
The industry is paying attention to the petrochemical support measures that the government is expected to announce. The Ministry of Trade, Industry and Energy is rumored to announce restructuring plans for the petrochemical industry at the end of this month. Deputy Prime Minister and Minister of Economy and Finance Ku Yun-cheol held a meeting on the 17th with Minister of Trade, Industry and Energy Kim Jung-kwan, Deputy Chairperson of the Financial Services Commission Kwon Dae-young, and Deputy Chairperson of the Fair Trade Commission Nam Dong-il to receive updates on the restructuring of the petrochemical industry.