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Media reports quoted data from the Korea Petrochemical Industry Association (KPIA) showed that steam crackers in the country are maximizing the use of liquefied petroleum gas (LPG) in their production to improve utilization rates and margins.

In 2023, the Russia – Ukraine war led to a drastic surge in LPG prices. However, the energy complex regains stabilization in 2024, creating an appealing price gap between naphtha and LPG that encourages petchem producers to incorporate more LPG in their crackers.  

South Korean crackers usually can replace between 20 – 30% of naphtha with LPG.

Data showed that in April, South Korea imported a total of 18.13 million barrels of naphtha, down from 22 million barrels in March. It is estimated that May’s figures might fall to around 17 million barrels.

In the meantime, KPIA estimated that LPG consumption at the country’s crackers rose 56% in March compared to the same period last year to 7.26 million barrels. Throughout the first quarter of 2024, LPG consumption stood at 16.81 million barrels, up by 22% on-year.

Reduced demand from South Korean petchem producers has kept spot naphtha prices in Asia below the $700/ton threshold throughout May. This condition is expected to pressurize crude oil refineries, where about 15% of the output is naphtha.

Meanwhile, the average utilization rates among South Korean crackers have increased to 81.8% in March compared to 75.9% in the same month in 2023. 

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South Korea