Analysis of Yeosu Chamber of Commerce report

Employment down 16.4%, operating rate off 5.5 percentage points

Industrial power consumption and other indicators also decline

Final restructuring plans for each complex expected to take shape by year-end

An aerial view of the Yeosu petrochemical industrial complex. [Provided by Yeosu City]
An aerial view of the Yeosu petrochemical industrial complex. [Provided by Yeosu City]

Job losses are becoming a reality at the Yeosu National Industrial Complex, South Korea's largest petrochemical hub. Deteriorating market conditions and geopolitical risks from the Middle East have driven more than 4,000 workers out of the complex in a single year, and the ongoing Middle East conflict has pushed the operating rate down to the low 80 percent range.

The Yeosu Chamber of Commerce's 2026 first-quarter regional economic trend report shows the complex employed 20,645 workers in the first quarter of this year — down about 16.4 percent from 24,686 in the same period last year. That represents a loss of more than 4,000 jobs in just one year. Compared with the previous quarter, when employment stood at 20,820, the figure fell 0.8 percent.

The petrochemical industry has been cutting output and consolidating operations, and this year the Middle East conflict added further disruption. When naphtha supplies tightened, LG Chem halted its No. 2 naphtha cracking center (NCC) at the Yeosu complex, while Lotte Chemical moved up the full shutdown of its Yeosu plant's production facilities by about three weeks.

These compounding pressures have weighed on the complex's operating rate, which topped 90 percent in 2022 but fell to 82.4 percent in the first quarter of this year. That marks a decline of 5.5 percentage points from the previous quarter's 87.9 percent, though it is 0.9 percentage points higher than a year earlier.

Outbound cargo from Yeosu also weakened. Shipments of petroleum refined products, bituminous oil and petroleum totaled 8,916,399 revenue tons in the first quarter, down 5.2 percent year-on-year and 1 percent quarter-on-quarter. Industrial power consumption in Yeosu fell to 3,035,018 megawatt-hours in the first quarter, down 17.3 percent from a year earlier and 7.3 percent from the previous quarter — a drop attributed to lower plant operating rates.

Meanwhile, restructuring to restore profitability in the petrochemical sector is urgently needed, but persistent domestic and external uncertainty has slowed final negotiations among the complexes beyond initial expectations. Last year, 10 petrochemical companies with NCC facilities set a target of cutting up to 3.7 million tons of capacity.

At the Daesan complex, a first-round restructuring project led by Lotte Chemical and HD Hyundai Chemical has received government approval, with a joint venture set to launch in September. At the Yeosu complex, Yeocheon NCC, DL Chemical, Hanwha Solutions and Lotte Chemical have submitted their final restructuring proposals to the government. Companies that receive restructuring approval from the Ministry of Trade, Industry and Energy may coordinate on output reductions or operating rate adjustments, and are permitted to exchange the minimum information necessary to carry out the restructuring.

However, talks on ethylene capacity cuts among LG Chem and GS Caltex at the Yeosu complex, and Korea Petro Chemical IND, SK Geocentric and S-Oil at the Ulsan complex, remain unresolved due to disagreements among the companies. Industry observers expect restructuring discussions to regain momentum as the Middle East conflict moves toward a resolution, but final proposals from each complex are not expected to take shape until around year-end.

"The Middle East war made stable raw material supply the top priority, and restructuring got pushed to the back burner," one industry official said. "But in the second half of this year, there will be progress of some kind in the talks at each complex."


keg@heraldcorp.com