LG Chem Ltd, South Korea's largest chemical company, said on Monday it will spend 287 billion won ($257.46 million) to add ethylene production to its Daesan naphtha plant by 2019, aiming to focus on lucrative items.
The company plans to increase the production capacity of its Daesan plant by 230,000 tonnes to 1.27 million tonnes over the next three years, the company said in a statement.
LG Chem's investment comes after the Korean government called for restructuring in the petrochemical industry as oversupply woes and increasing competition from China put pressure on Korean companies.
In line with the government's plan, the company said the decision was made to secure raw materials needed for high value-added products and maintain its lead in the market.
The expansion will increase LG Chem's total ethylene output capacity to 2.43 million tonnes, together with its Yeosu plant, according to the statement.
At present, LG Chem operates a 1.04 million tonnes per year (tpy) of naphtha into petrochemicals in the southwestern city of Daesan and another 1.16 million tpy naphtha cracker located in Yeosu, about 350 kilometres (217.48 miles) south of Seoul.
The company stated it will convert one of its two polystyrene (PS) production lines at the Yeosu Plant into high value-added acrolonitrile, butadiene and styrene (ABS) by the first half of 2017, as the government urged to streamline oversupplied products such as PS in a bid to enhance competitiveness.
In order to boost sales in the lucrative items including ABS, which is mainly used for vehicles and home appliances, the conversion is expected to raise production of ABS by 30,000 tonnes per year to 880,000 tonnes, while that of PS is expected to decline by 50,000 tonnes per year to 50,000 tonnes, the statement noted.