South Korea and Japan, once the petrochemical leaders of Asia with a combined ethylene capacity of 20 million metric tons (t) per year, are seeing their industries contract rapidly. The main driver is China’s large-scale expansion of petrochemical capacity, which is forcing other Asian producers to respond to remain competitive.
In South Korea, another round of government-led restructuring is taking shape. The government recently approved a restructuring plan for a large petrochemical complex in Yeosu.
Under the plan, Yeochun NCC will close two ethylene plants, eliminating 1.4 million t per year of capacity. South Korea will provide a total of about $475 million in financial, tax, and R&D support to participating companies. Yeochun NCC—jointly operated by Hanwha Solutions and DL Chemical—and Lotte Chemical’s Yeosu operations will be merged into a new joint venture in which each of the three companies holds a one-third stake.
South Korea had previously approved a restructuring plan for the Daesan complex, under which Lotte Chemical and HD Hyundai Oilbank jointly cut 1.1 million t of ethylene capacity earlier this year. Between the closures in Yeosu and Daesan, 2.5 million t of ethylene capacity will have been cut.
South Korea traditionally operated about 13 million t of ethylene capacity, roughly twice Japan’s level. In August 2025, the South Korean government requested restructuring and competitiveness-enhancement plans from 10 major petrochemical companies, centered on cutting 3.7 million t of capacity. Once plans for the remaining major hub, in Ulsan, are set in action, roughly one-third of South Korea’s total ethylene capacity will have been eliminated.
Japan’s ethylene industry, meanwhile, is undergoing restructuring led by private companies. The country previously completed two major restructuring cycles—first around 2000 and again between 2014 and 2016—and is now entering a third phase. As a result, Japan’s annual ethylene capacity has fallen from a peak of 7.5 million t to just over 6.1 million t.
Restructuring continues: Mitsubishi Chemical Group, Asahi Kasei, and Mitsui Chemicals have formed a joint venture to shut the Mizushima ethylene unit and consolidate production at Mitsui’s Osaka complex. As part of this integration, Asahi Kasei will cease production of styrene and polyethylene at Mizushima and withdraw from both businesses.
Japan’s largest petrochemical hub, Chiba, is also contracting. Maruzen Petrochemical and Idemitsu Kosan have decided to shut units there, reducing the region’s ethylene infrastructure from five units at its peak to two. In Kawasaki, Eneos plans to close one ethylene unit. By 2030, when these closures are complete, Japan’s ethylene fleet will have shrunken to eight units nationwide, and total capacity will have fallen to 4.4 million t per year.
Petrochemical expert Masanori Kawakami notes that South Korea’s petrochemical industry is particularly vulnerable. “With a population of 50 million and more than 10 million t of ethylene capacity, Korea must export well over 50% of its production, most of it to China. The industry is highly exposed to China’s capacity expansion and to the slowdown in China’s economic growth,” he says.
China, meanwhile, is pursuing petrochemical self-sufficiency and continues to expand ethylene output; its capacity is expected to reach 70 million t per year by 2027. As a result, exports from China are growing across downstream markets. Polyvinyl chloride exports, for example, surged 46% year on year to 3.82 million t in 2025.
China’s expansion is affecting not only Japan, with its older and smaller facilities, and South Korea, with its high export dependence, but also producers in Thailand, Singapore, and other Southeast Asian countries. But Kawakami notes that the economy of Southeast Asia continues to grow at 4–5% annually, giving producers in the region a stronger domestic demand base to rely on.
