Government Draws Line Under "No April Crisis," but Naphtha Turmoil Triggers Petrochemical Plant Shutdowns [Resource Security 2.0 Era]

As Iran’s prolonged blockade of the Strait of Hormuz fuels speculation about an "April crude oil and naphtha supply crisis," the government continues to stress that "there is no problem with supply." On the ground, however, plant shutdowns — suspensions of operations — have already begun. The fallout now threatens to spread beyond petrochemicals to a wide range of manufacturing sectors, including plastics, household goods, and food and beverages.
Authorities believe that crude oil supply in April will not face major disruption, citing alternative sourcing and the planned release of strategic reserves.
Yang Ki-uk, Director-General for Industrial and Resource Security at the Ministry of Trade, Industry and Resources (MOTIR), said at a briefing on the 23rd, "Refiners are securing volumes through alternative shipping routes, and cargoes imported from the United Arab Emirates (UAE) are scheduled to arrive in sequence." He added, "We have also planned to release strategic reserves in mid-April, so there will be no problem with supply."
Regarding concerns over a shortage of naphtha, the government maintains that it can respond by diverting refiners’ export volumes to the domestic market and, if necessary, issuing an emergency supply adjustment order.
Conditions on the ground, however, tell a different story. At the Yeosu National Industrial Complex in South Jeolla Province, production disruptions are already intensifying due to naphtha supply bottlenecks.
LG Chem has decided to suspend operations at its Yeosu No. 2 Naphtha Cracking Center (NCC) plant and run only the No. 1 facility. This means an ethylene production line with an annual capacity of 800,000 tons has been shut down. Yeochun NCC has also halted part of its olefin conversion process and begun adjusting output. Lotte Chemical has moved up a major maintenance shutdown that was originally scheduled for next month by about three weeks and will now carry it out starting at the end of this month.
Naphtha prices are also surging. The price recently climbed above 1,000 dollars per ton, nearly doubling compared with January.
The real concern is that this shock is spreading beyond petrochemicals to the broader industrial sector. The plastics industry has already been hit directly. According to a survey by the Korea Federation of Plastic Industry Cooperative, 71.1 percent of responding companies have been notified of potential reductions or suspensions in synthetic resin supply, and 92.1 percent have been informed of price hikes. Synthetic resin accounts for 83 percent of production costs, so any price increase immediately erodes profitability.
The impact on everyday consumer products is also becoming visible. As inventories of polyethylene used for volume-based waste bags have fallen to roughly one month’s supply, the government has launched a nationwide stock survey of local governments. If naphtha supply disruptions persist, shortages of these waste bags will be unavoidable.
The food and beverage industry is likewise on edge. Rising prices of ethylene and propylene are driving up pressure to increase packaging material costs, while inventories are only sufficient for at most about three months.
solidkjy@fnnews.com Reporter Koo Ja-yoon and Park Ji-young Reporter