South Korea's Lotte Accident On China's Styrene, Ethylene Glycol Market Impact?

- Mar 09, 2020-

Back to top: at about 2:59 a.m. on March 4, a huge explosion occurred at the NCC • Naphtha Cracking Center, a mountain plant of western mountain lotte chemical.

Fire authorities responded to the explosion with all available manpower and equipment from nearby fire departments.

Immediately after the accident, the local government in the western city sent out safety text messages to remind residents to pay attention.

"The asylum order was not issued because it was not caused by the release or occurrence of harmful chemicals," explained jin xianjing, vice mayor of xishan city.


The annual production capacity of the plant includes: 1.1 million tons of ethylene, 550,000 tons of propylene, 150,000 tons of butylene, 240,000 tons of benzene, 440,000 tons of LD/LLDPE, 500,000 tons of PP, MEG 730,000 tons, 100,000 tons of PMMA, 100,000 tons of MMA, 580,000 tons of SM, etc.


What is the impact on Chinese styrene?


In May 2019, China's domestic styrene market was helped by a long parking period at the total plant in South Korea.


First of all, we have a brief understanding of the distribution of styrene production capacity in South Korea. According to the statistical data of jin lianchuang, the total production capacity of styrene in South Korea is 3.025 million tons, including 8 production lines of SKGC, YNCC, LG chem, HTC and lotte chemical.

Lotte chemical, meanwhile, has a styrene plant with a capacity of 580,000 tonnes a year, accounting for 19 per cent of total local capacity.

In terms of the unit volume alone, the influence of lotte chemical styrene on the local supply and demand in Korea cannot be ignored.


For China, South Korea's imports from China were as high as one third or more before 2018, but since the anti-dumping in 2018, South Korea's imports from China have shrunk sharply.

According to import statistics for 2019, under the effect of anti-dumping and the long-term shutdown of total in the second quarter, the total import volume from China for the whole year was 151,500 tons, accounting for 5% of the total import volume.


Due to the limited proportion of imports, and the current evaluation of rakuten's parking period has not been concluded, the market reaction to the failure is also rational, of course, it is also closely related to the change of China's styrene supply and demand pattern, as well as the current environment.

Within days east China spot around 6550 yuan/ton up and down shock.


End of January 2020 in early February styrene zhejiang petrochemical 1.2 million tons/year new device gradually release the product, and have supplied with cargo to fujian and east China region, styrene and dalian hengli 720000 tons/year new device also in late February after the qualified products and stable operation, the first ship arrived in early march jiangyin agreement reservoir, styrene domestic autonomous ability increase greatly.

Not only that, according to jin lianchuang on March 4, the latest statistics show that jiangsu styrene total inventory increased to 322,200 tons, excluding construction board and China resources library.

In addition, also including part of the styrene production enterprises latent inventory to be digested.

Even if terminal demand and downstream industries gradually recover in the later stage, the short and medium term supply and demand stage or the stage of mutual digestion and running-in, both supply and demand, are quite different from the background of the hanwha total accident in the second quarter of 2019.


In addition, since the fourth quarter of 2019, some devices in Japan and South Korea have been operating at reduced rates due to weak profits and poor demand.

At the same time, the recent situation of the new epidemic in South Korea is severe, and the downstream demand is likely to be further suppressed. Even if the late shutdown period of lotte is longer than expected, the load adjustment and increase of other devices and the trend of relatively limited demand follow up, it is difficult to play a significant role in boosting the market.


In general, as the main trade circulation role in northeast Asia, South Korea undeniably plays an important role in regulating the flow of goods in Asia.

However, the domestic supply of styrene in China has increased significantly, the downstream recovery is relatively slow, and the Korean supply and demand is weak, the impact on the Chinese styrene market is limited.


Interpretation of the impact of ethylene glycol market in China


Currently, South Korea's ethylene glycol plant has a total capacity of 1.65 million tons, and the unexpected accident at the lotte chemical plant in South Korea resulted in the loss of 730,000 tons of ethylene glycol capacity in South Korea.

It accounts for 44.24% of South Korea's total capacity.

Will it affect the ethylene glycol market in China?


Currently, South Korea's ethylene glycol plant has a total capacity of 1.65 million tons, and the unexpected accident at the lotte chemical plant in South Korea resulted in the loss of 730,000 tons of ethylene glycol capacity in South Korea.

It accounts for 44.24% of South Korea's total capacity.

Will it affect the domestic ethylene glycol market?


As is known to all, China is a large demand country for ethylene glycol, more than half of its ethylene glycol needs to be imported.

The top three countries and regions for China's import volume are Saudi Arabia, Taiwan and Canada.

South Korea accounted for 5.44 per cent of imports last year.

The fifth is non-major ethylene glycol importer.

In march last year, China imported 701,400 tons of ethylene glycol, and South Korea imported 37,600 tons of ethylene glycol in March, accounting for 5.3% of the total import volume. Therefore, this incident has a small impact on the domestic market, but it can still relieve some port inventory pressure.

From another point of view, South Korea recently affected by the new pneumonia outbreak, the number of people continue to increase.

Even if there is no emergency, it is possible for China to restrict the import of ethylene glycol to Korea in the future.