South Korean credit rating agency NICE Investors Service recently released a report indicating that the preliminary combined operating losses of major South Korean petrochemical companies in 2025 reached 1.5 trillion won, a significant increase compared to 1.1 trillion won in 2024. The report shows that although the industry has been in the red for two consecutive years, the fourth quarter of 2025 saw a substantial decline in product spreads, inventory impairment losses, and increased one-time costs, leading to a further deepening of annual losses.
NICE stated: "In the fourth quarter of 2025, the industry recorded substantial losses due to a sharp decline in core product spreads, inventory valuation losses, and other one-time expenses, ultimately causing the annual loss scale to expand significantly." The statistics covered eight companies including LG Chem (excluding LG Energy Solution), Lotte Chemical, KPIC, Hanwha Solutions, SKC, Kukdo Chemical, Kumho Petrochemical, and Hyosung Chemical.
Faced with the continued downturn in the petrochemical industry, many companies recorded large one-time expenses in 2025 to advance long-term restructuring. For example, LG Chem recorded 1.9 trillion won in one-time costs in the fourth quarter, related to "expected adjustments and strategic transformation of petrochemical, battery, and materials businesses," resulting in an operating loss of 413 billion won for the quarter and a net loss of 1.57 trillion won for the year. Lotte Chemical, during the same period, recorded approximately 1 trillion won in asset impairment losses for goodwill and tangible assets due to "downward revisions of profit expectations in a persistently weak environment."
Regarding product performance, the South Korean olefins segment saw spreads plummet in the fourth quarter of 2025 due to oversupply and lagging demand recovery; the aromatics segment improved in the second half of 2025, with para-xylene (PX) returning above the breakeven line. NICE emphasized that although restructuring in the South Korean petrochemical industry has begun, it will still take a considerable amount of time to see substantive effects.
Facing challenges such as oversupply and weak demand, the South Korean government has set a target for ethylene capacity reduction: an annual reduction of 2.7 to 3.7 million tons. NICE pointed out that substantive adjustments such as plant shutdowns, integration, and pipeline relocation require lengthy cycles to be implemented and take effect due to complex negotiations and execution obstacles. The widening losses of South Korean petrochemical companies reflect the urgency of industry transformation.
