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KOREA, Your global link to SUCCESS
- Chemical Industry in Korea and Investment Cases -
September 19, 2018
Yongsoo PARK
Key Industry Investment Promotion Team
KOTRA Invest KOREA
Korean Chemical Industry
Government Policy
Investment Cases
KOTRA Services
Korean
Chemical
Industry
• Industrial Position
• Export
• Import
• Value Chain
• Ethylene Production
• Chemicals Production by Category
• Investment Trend of Petrochemical
Companies
USD 92.1 billion (20.6%)
The chemical industry accounts for the majority of Korean production and export
Added-Value(‘16) Employment(’16) Export(‘16)
550,000 (18.4%) USD 75.6 billion (15.3%)
Others
Chemical
92.1billion
Automobile
Semi-conductor
Machinery
Display
Steel Fabric
Others
Chemical
550,000
Automobile
Machinery
Fabric
Shipbuilding Others
Chemical
75.6billion
Automobile
Semi-condu
ctor
Machinery
Mobile
Fabric Semi-conductor
Steel
Shipbuilding
Steel
1970s-1980s 1990s-2000s After 2000s
Construction, Fabric, Shoes Electronics, Automobile Semi-conductors, Displays,
Batteries
4th Industrial Revolution
Drones, 3D Printing
PVC, Synthetic Materials, Synthetic Rubber(shoes)
High-purity/Fine Chemicals Synthetic Resin(PE, PP), Synthetic Rubber(Tyre)
Light-weight/Multifunctional Materials, AI, Machine-
learning
Lead the growth of other industries, and closely associated with upstream/downstream industries
Industrial Position
① Semiconductor ② General Machinery ③ Automobiles ④ Petrochemicals ⑤ Ships ⑥ Wireless Communication Devices ⑦ Steel ⑧ Petroleum Products ⑨ Automotive Parts ⑩ Displays 11 Textile 12 Home Appliances 13 Computers
5
Export of Chemical Products
78.2% of Exports
• In 2017 Korea’s exports surged by 15.8% to a record $573.7 billion from a year earlier
• The record-high export was driven by a significant growth in semiconductor exports, which
soared by 57.4% to $97.7 billion due to the high demand for memory chips
• Rising oil prices helped boost exports of petroleum products and petrochemicals by 32.4%
and 23.6% respectively
57.4%
10.1%
3.8%
23.6%
23.1%
-14.5% 19.9% 32.4%
-9.5%
9.0%
-0.5%
-22.2%
9.2%
6
Item Amount
($ billion) Growth
(%)
Semiconductor 41.2 12.5
Semiconductor Manufacturing Equipment 19.3 120.4
Petroleum Products 15.1 26.0
Wireless Communication Devices 13.3 0.4
Computers 11.7 19.4
Automobiles 10.9 4.1
Fine Chemicals 9.9 21.9
Textile 9.2 7.9
Steel Plate 7.9 13.4
Measurement and Analysis Instruments 7.3 10.4
Agricultural chemicals and Pharmaceuticals 6.8 2.5
Industrial electric devices 6.6 14.5
Aluminum 6.4 19.2
Import of Chemical Products
• In 2017 brisk domestic production and exports of Korea helped drive up its imports by 17.8%
to $478.4 billion
• Inbound shipments of capital goods increased by 33.2% as imports of semiconductor
manufacturing equipment more than doubled
Demand industries(Electronics, Automobile, etc.) are closely associated with the chemical industry.
Crude Oil
Naphtha Ethylene
Propylene, etc. Base Materials
(Organic Solvents)
Dyes, Pigment, Adhesive, etc.
Automobile, Electronics,
Batteries, etc.
Synthetic Resin (PE, PP) Plastic
Tyre/Rubber Synthetic Rubber (SBR,
BR)
Synthetic Fiber Materials (TPA,EG)
Automobile, Electronics,
Construction, etc.
Synthetic Fiber Clothing, Fabric, etc.
Partner companies (Catalyst, Additives, Facility maintenance, Logistics, other supply-related)
1 Petrochemical 1 Fine Chemical
3 Rubber/Plastic
2
3
• Enormous facility investments needed
• Few partner companies exist
• Some large companies
(Hankooktire, Nexentire)
• Mostly SMEs with sales under USD 500mil
Petrochemical – Conglomerates-oriented 1 Fine Chemical – SMEs, A variety of
products 2 Rubber/Plastic – SMEs-oriented 3
Medium-sized Small
1b 0.5b 100m 50m
1 6 9 5,000 40
Value Chain of Chemical Industry in Korea
Production capacity by Korean company
Rank Company 2015 2016 2017 Year
share(%)
1 LG Chem 2,200 2,200 2,200 24.4
2 Lotte Chemical 2,100 2,100 2,100 23.3
3 YeoChun NCC 1,910 1,910 1,950 21.7
4 HanwhaTotal 1,090 1,090 1,095 12.2
5 SK Global Chemical 860 860 860 9.6
6 Korea Petrochemical 470 470 800 8.9
Total 8,630 8,630 9,005 100
30.259 18%
24.162 14%
17.630 10% 9.005
5%
7.339 4%
6.535 4%
75.704 45%
Production capacity by country
USA
China
Saudi
S Koera
Iran
India
etc.
(Unit : 1,000 ton)
Ethylene Production
500
700
900
1.100
1.300
1.500
1.700
1.900
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
2012 2013 2014 2015 2016 2017
[Production trend]
Ethylene Synthetic Resine
Synthetic Fiber Synthetic Rubber
(1,000 Ton) Year Ethylene
Synthetic Resin
Synthetic Materials
Synthetic Rubber
2012 7,975 11,966 8,387 1,006
2013 8,327 12,568 8,143 1,037
2014 8,248 12,543 7,687 1,009
2015 8,275 13,110 7,138 978
2016 8,524 13,450 6,822 893
2017 8,793 13,886 7,232 858
AAGR (`12~`17)
2.0% 3.0% -2.9% -3.1%
Chemicals Production by Category
Types 2016 2017 2018.6(p) Year
Change(%)
New product line 1,245 764 999 30.7
Expansion 2,013 2,661 2,490 -6.4
Maintenance 1,185 1,057 1,145 -1.4
Automation 100 88 84 -3.7
Energy & Environment 180 245 259 5.4
R&D 465 580 602 3.9
Etc. 844 702 631 -10.1
Total 6,037 6,508 6,512 0.1
(USD million)
Investment Trend of Petrochemical Companies
Government
Policies
• Vision and Strategy
• Development of 10 Core
Chemicals for 5 Major Industries
• Increase Production Capacity of
High-value Chemicals
3 major Petrochemical
Complex Renaissance
Ulsan
Daesan
Yeosu
Portfolio Diversification toward
Cutting-edge Chemical Industry
Win-win Cooperation within Chemical
Industry
A leap from wide-use petrochemicals to advanced chemical industry
Vision and Strategy
Displays
5 Demand Industry
Semi-conductors
Electronics
Automobile
Energy
Major Companies
LG Display Samsung Electrics
Samsung Electrics SK Hynix
LG Electrics Samsung Electrics
Hyundai
LG Chemical Samsung SDI
10 Chemical & Materials
Optical Films Luminescent dyes
Photo chemical Precursor
Adhesive Flexible PCB
Complex Materials Coating, Film
Li Battery Solar films
5 Industries and 10 Core Materials
Strengthening collaborative R&D with conglomerates
• Encourage conglomerates to participate in collaboration with SMEs from the product development stage
• Concentrate R&D budget on 10 core materials, giving plus points for partnership R&D between demand company and material supplier
Conglomerates Capital, HR
SMEs Specialty
Technologies
Secure material sourcing & domestic demand
Secure technology competitiveness & market
Co- R&D
• Ex) SKC developed 10 sorts of semi-conductor materials by co-development with SMEs like Dongjin semichem, D&F, E&F technologies. (Feb, 2015)
Establishing complementary relationship in markets & technologies between large fine chemical companies and SMEs
Development of 10 Core Chemicals for 5 Major Industries
Strengthening R&D and production capacity of high-value chemical materials
Synthetic Resin
Polyethylene Polypropylene
Polystyrene Poly Vinyl Chloride
Synthetic Rubber
BR, SBR
Synthetic Materials
Terephthalic acid
Others NaOH
High-value products Extensive-use
High-functional PE Engineering Plastic
(Polyimide)
ABS CPVC
SSBR, EPDM
PIA
KOH
SAP
Companies
Government
• Extend R&D investments up to the level of advanced countries (3%)
0,57
1,3 3,4
LotteChemical
HanwhaChemical
LG Chem
3,8 3,3 2,3
BASF Dow Chem Mitsui
• Strengthening R&D of high-value materials (USD 200mil by 2022)
• Commercialization of high-functional specialties by improving earthquake-proof, fire-proof, eco-friendliness
Improving global competitiveness of petrochemical industry
• Reconstruction for secure supply of high-quality raw materials, creating domestic jobs, and sustainable export - World-class production efficiency through expanding the facilities and continuous business reorganizations
Maintain high the NCC efficiency through continuous investments
- Diversify raw-materials other than petroleum for the sake of cost competitiveness and easing the tax burdens
Stable procurement of condensate, gas materials Mitigate customs for Naptha
Companies
Gov’t Support change of product facilities for common products to ones for high-value products
Increase Production Capacity of High-value Chemicals
Investment
Cases
• Solvay
• Gestamp
• Umicore
• Mitsubishi Chemical
• Unilever
Ewha·Solvay Research&Innovation Center
• Solvay Korea was established in 1975
• 5 administrative sites in Korea
- Solvay Korea - Solvay Silica Korea Co., Ltd - Solvay Fine Chemicals Korea - Solvay Korea Co., Ltd - Solvay Specialty Polymers Korea Company Ltd • Investments in Korea - Established a global head office of specialty chemicals GBU * GBU(Global Business Unit) - R&I center in Ewha Woman’s University
• Growing platform with large customers such as Hankook Tire, LG Display • Rapid growth of high-tech industry • Outstanding workforce
Why Korea?
Solvay
• Gestamp Kartek
- Employees : 202
- An auto parts manufacturer
• Investments in Korea
- Kartek Corporation established, 1995
- Joint Venture (60% of equities), 2007
- 100% acquisition, 2009
57 67
89
119 115
2013 2014 2015 2016 2017
• Financial Highlights (Sales) (USD million)
Gestamp
Umicore RBM Korea (Rechargeable Battery Materials)
Ordeg (Automotive Catalysts)
• Established in 1999, located in Cheonan City
• Produces cathode materials for lithium-ion rechargeable
batteries since 2000
• Research & Technology Center, 2005
• Oversees Umicore’s battery materials research since 2008
• 3 sites, all in Cheonan City
- Umicore Korea (Site1)
- Umicore Materials Korea (Site2)
- Umicore Materials Korea (Site3)
• Established in 1985, located in ‘Onsan National Industrial
Complex’, Ulsan City
• Specialized in manufacturing catalysts
• Leading the automotive catalyst industry through continued
technology development at R&D center in Songdo with the
headquarter of business unit of Automotive Catalysts in Hanau.
• 3 sites
- Seoul Office
- Onsan Plant
- Songdo R&D Center
Umicore
Product Scale Site
MMA1 90,000t/year Chungnam Province Seosan City Lotte Chemical factory
MAA 16,000t/year
HEMA 11,000t/year
MMA2 105,000t/year Jeonnam Province Yeo-su City Lotte Chemical factory PMMA 110,000t/year
• Facility
50% 50%
• LotteMCC was established in August, 2006
• Joint Venture between Lotte Chemical(Korea) and Mitsubishi Chemical(Japan)
• Manufacture and sale of MMA and PMMA
Designated as a business accompanying
high technology
• Financial Highlights (USD million)
Mitsubishi Chemical
540 560
411 414
572
14 23 53 56
154
0
100
200
300
400
500
600
700
Sales Operating profits
2013 2014 2015 2016 2017
• Established in 2009
• Own brands : AHC, Dr.MJ, Shara Shara, Vivito etc.
Acquired Carver korea in 2017 (USD 2.6 billion) → Expected to create strong synergy together with global network of Unilever
45
472
2014 2017
• Financial Highlights (Sales)
(USD million)
“South Korea is the 4th largest skincare market in the world and is also a source of global beauty trends, with the term ‘K-Beauty’ becoming a globally-used shorthand for sophisticated skincare that is widely exported. Carver has a very strong position in this space, and it will therefore strengthen Unilever’s expertise in the Asian beauty market, and its Beauty & Personal Care category globally.”
Unilever
KOTRA
Services
• GAPS
(Global Alliance Project Series)
• IKMP
(Invest Korea Market Place)
22
Joint Research & Development
Startup Investment
Joint Venture
Strategic Sourcing
Co-Marketing Universities
Research Institutes
Startups
Corporations
Global Corporation
• Customized program for global corporations who are keen to establish business partnerships with Korean companies or R&D institutes
• New opportunities to invest in Korean startups and companies, perform joint R&D activities, purchase products, and build co-marketing partnerships
GAPS(Global Alliance Projects)
Track1
Track5
Track3
Track2
Track4
23
IKMP(Invest Korea Market Place)
• As of April 2018, 260 companies and development projects uploaded
Industry # Industry #
ICT 65 Business Services 25
Bio/Healthcare 27 Contents 17
Automotive/Machinery 26 Energy /Environment 15
Consumer products 21 Chemicals /Materials 4
Banking 16 Aviation 2
Electronic/Electric 18 Logistics 3
Development Projects 18 Robot 3
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