APIC ’16: Korea petchems diversify markets amid China slowdown

Pearl Bantillo

20-May-2016

SINGAPORE (ICIS)–South Korean petrochemical companies are pursuing diversification of markets amid the slowdown in China – their key export destination, Korea Petrochemical Industry Association (KPIA) chairman Jin-Soo Park told ICIS on Friday.

These companies look to other emerging economies and even Europe as target markets, Park said at the sidelines of the 37th Asian Petrochemical Industry Conference (APIC) in Singapore.

China, which is the world’s second-biggest economy and a major importer of petrochemicals, has been slowing down over the past five years. Its 2015 GDP growth at 6.9% was the lowest in 25 years.

Meanwhile, oil price volatility continues to affect the petrochemical industry’s profitability.

If oil can be at $60/bbl levels, it will pose “no problem” for petrochemical companies “profit-wise, but we have to grow”, Park said.

“Revenue will decrease – we have to take some counter measures to grow,” he said.

Park, who is also the vice chairman and CEO of LG Chem, said that strategies for expansion vary from company to company.

“We diversify our business portfolio. Some Korean companies focus on petchems but they expand [to other] locations – go to Asia or the US,” the LG Chem executive said.

In a speech before APIC delegates, the KPIA chairman called for a rethink of protectionist measures being adopted by some countries amid “greater uncertainties in the global trade environment”.

Protectionism will hamper industrial activities and investment, and “will not only hinder growth of the petrochemical industry in Asia but also slow down the development pf the global economy”, he said.

“Therefore, I would like to ask you for rational reasoning. In other words, adhering to and implementing procedures under the international norm, rather than imprudent trade measures,” Park said.

The two-day conference ends Friday.

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