South Korea Reviewing Naphtha Export Restrictions Amid West Asia Supply Disruptions

SEOUL, March 24 (Bernama-Yonhap) -- The government is considering imposing restrictions on naphtha exports as South Korea is facing supply shortages of the material, widely used across petrochemical and other industries, due to persisting geopolitical tensions in West Asia, Yonhap News Agency reported. 

"Related ministries are preparing for the implementation of naphtha export restrictions," Deputy Minister for Trade, Industry and Resource Security, Yang Ghi-wuk, said in a daily briefing on resource supplies amid the West Asia crisis, noting that the government is aiming to announce such a measure within this week.

The preparations come as the country is seeing increasing disruptions in naphtha supplies following the United States (US) and Israeli airstrikes against Iran late last month, with Yeochun NCC and other companies announcing "force majeure" for some of their products due to naphtha shortages.

Force majeure refers to the occurrence of an unforeseeable and uncontrollable event that prevents a company from fulfilling a contract.

South Korea imports around half of its naphtha through the Strait of Hormuz, a major Middle Eastern trade route, which has effectively been closed due to the war.

"In case the (supply shortage) situation prolongs, we are also preparing for an emergency supply adjustment order," Yang said, adding that various industries that use petrochemical materials, such as shipbuilding and home appliances, are already affected or expected to see an impact from the situation.

On Monday, LG Chem Ltd. suspended operations of its ethylene production facility in the southwestern city of Yeosu due to naphtha supply disruptions. Ethylene is produced by cracking naphtha.

Last week, the government temporarily designated naphtha as an economic security item to better stabilise the supply and support affected companies.

-- BERNAMA-YONHAP