South Korea Orders Major Chemical Cuts to Save Industry

The South Korean government has directed its two largest chemical companies, Lotte Chemical and LG Chem, to significantly reduce their production of ethylene. This order is a direct intervention to prevent a severe industry crisis. Ethylene is a fundamental chemical used to make plastics, packaging, and synthetic fibers. However, a massive global oversupply, primarily from new factories in China, has caused prices to collapse. Korean producers cannot compete, leading to major financial losses. Officials warn the entire national chemical sector is at risk. The government's plan demands Lotte and LG, which together operate half of South Korea's ethylene capacity, to permanently shut down some older facilities. The goal is to cut national production by at least 20%. This move is unprecedented. Analysts say it highlights the extreme pressure facing export-reliant economies from Chinese manufacturing expansion. The forced downsizing aims to stabilize the Korean chemical industry by reducing unprofitable output and focusing on higher-value products.