South Korea's Lotte Chemical has restarted its Yeosu cracker after a two-month maintenance shutdown triggered by Middle East feedstock disruptions, offering some relief to global petrochemical buyers. The restart, which occurred on May 28, 2026, ahead of its early June target, signals cautious recovery in a market still grappling with geopolitical uncertainty and structural reforms. Overseas importers and distributors should monitor operating rates and supply stability for ethylene and propylene derivatives.
Restart timeline and feedstock crisis
The Yeosu cracker was taken offline in late March, earlier than planned, due to severe naphtha shortages caused by the Middle East crisis, including Strait of Hormuz blockades. South Korea imposed a five-month naphtha export ban to prioritize domestic supply. The facility, with annual capacity of 1.2 million metric tons of ethylene and up to 665,000 metric tons of propylene, resumed operations on May 28, 2026.
Operating rates remain below pre-war levels
Despite the restart, Lotte Chemical projects June and July operating rates below pre-war benchmarks. Propane cracking volumes are expected to drop to under 50,000 metric tons per month from an average of 70,000 mt/month, while butane cracking volumes will fall below 30,000 mt/month from 35,000 mt/month. This indicates continued supply constraints for downstream buyers.
Market sentiment and geopolitical risks
The broader petrochemical market remains cautious, with participants adopting a "wait-and-see" approach due to ongoing U.S.-Iran military tensions. LPG and naphtha markets are quiet, and buying demand is limited despite recent price declines. Overseas buyers should factor in persistent geopolitical uncertainty when planning procurement.
What buyers should watch
Buyers of ethylene, propylene, and derivative products like plastics and vinyl should track Lotte Chemical's operating rates closely. The Daesan plant has increased rates to 83% to stabilize supply for critical items such as medical IV fluid bags and concrete admixtures. Any further disruptions in Middle East feedstock flows could tighten supply again.
China sourcing context
South Korea's petrochemical restructuring, including a government-backed plan to cut ethylene capacity by up to 25%, aims to address oversupply from China and declining margins. Mergers like Lotte Chemical-Hyundai Chemical at Daesan and Yeochun NCC-DL Chemical-Hanwha Solutions at Yeosu are reshaping the competitive landscape. Overseas importers should evaluate long-term supply reliability as South Korea pivots to high-value products.
Source: Read the original report | Published: May 29, 2026