China's leading petrochemical giant, Rongsheng Petrochemical, is set to embark on a substantial expansion of petrochemical products at the onset of the new year. This ambitious venture, encompassing intermediate raw materials and synthetic resins, poses a significant challenge to Korean petrochemical companies, given the overlap with their primary product lines.

Sources within the petrochemical industry revealed on January 10 that Rongsheng Petrochemical plans to invest a staggering $12.2 billion in a refinery and petrochemical project located in China's Zhoushan Islands. The key components of this expansive project include the construction of a three-million-tons-per-year catalytic cracking unit, a one-million-tons-per-year separation unit, and a 600,000-ton-per-year aromatics extraction plant.

Emphasizing its commitment to a diversified petrochemical complex, Rongsheng Petrochemical detailed its plans to achieve an annual production capacity of 300,000 tons of refined ethylene oxide (EO), one million tons of ethylene vinyl acetate, and 200,000 tons of polyolefin elastomer (POE). Additionally, the complex aims to produce 400,000 tons of phenol, 250,000 tons of acetone, 400,000 tons of propylene oxide (PO), 800,000 tons of styrene monomer, 500,000 tons of 1,4-butanediol, and 120,000 tons of isobutylene annually. The project also includes the installation of a carbon dioxide capture unit with a capacity of 150,000 tons per year.

The Chinese giant plans to establish production facilities capable of manufacturing 1.2 million tons of acrylonitrile butadiene styrene (ABS), a durable and versatile material widely used in the exteriors of electronic products. This move directly competes with Korean companies, including LG Chem, Lotte Advanced Materials, and Kumho Petrochemical, who have been major players in the ABS business. Rongsheng Petrochemical's strategic initiative also involves the construction of two facilities dedicated to polycarbonate production, aiming for a combined output of 520,000 tons. The competition in the ABS business intensifies with analysts speculating that LG Chem might lose its global leadership position to Taiwanese and Chinese counterparts.

The Korean petroleum industry has been grappling with a heightened sense of crisis since the beginning of the year, exacerbated by strategic shifts in major players. In a significant move, Lotte Chemical divested all its general-purpose petrochemical production plants in China during 2023. The decision was driven by China's aggressive expansion of general-purpose petrochemical plants, which eroded the price competitiveness of these facilities. Lotte Chemical's response involves a strategic reorganization to focus on increasing the production of high-value-added products, reflecting the industry's adaptation to changing market dynamics.

The trajectory of Rongsheng Petrochemical's ambitious expansion and its impact on the Korean petrochemical sector underscores the dynamic nature of the global petrochemical industry. The colossal investments and strategic moves by major players such as Rongsheng Petrochemical are reshaping the competitive landscape, leading to intensified competition and a re-evaluation of business strategies within the industry. As these developments unfold, industry stakeholders will closely monitor the evolving dynamics and position themselves strategically to navigate the challenges and capitalize on emerging opportunities in the dynamic petrochemical market.