A joint venture between South Korean refiner Hyundai Oilbank and petrochemical firm Lotte Chemical is scaling back plans for a heavy feedstock complex, reducing targeted production capacity amid oversupplied polymers markets.
The Hyundai Chemical joint venture has awarded a contract to South Korea's Daelim Industrial to build the complex, which will be located at Hyundai Oilbank's refining complex in Daesan. Daelim Industrial said yesterday the complex will have capacity to produce 300,000 t/yr of low-density polyethylene (LDPE), 300,000 t/yr of high-density polyethylene (HDPE) and 250,000 t/yr of polypropylene (PP).
This is significantly below the capacities planned when the partners sanctioned the 2.7 trillion won ($2.33bn) project in late May for it to produce 750,000 t/yr of polyethylene (PE) and 400,000 t/yr of PP, or 150,000 t/yr lower than previously planned.
The construction contract was signed last week, with the project still scheduled for completion by the end of June 2021.
The complex will use heavy fuel oil as its feedstock, which Hyundai Oilbank said will yield higher profitability than a traditional naphtha-fed plant. Heavy fuel oil prices are expected to be dragged down by new International Maritime Organisation restrictions on marine fuels.
Polymers supplies are increasing with Malaysia's state-owned Petronas boosting PE and PP output at its new Pengerang refining complex in Johor state. New capacity is scheduled to come on stream next year in South Korea, Oman and the US. PP capacity additions in Asia-Pacific will exceed demand growth for a third straight year in 2021, said South Korean refiner S-Oil.
