South Korea weighs naphtha export curbs as Hormuz disruption squeezes feedstock flows

South Korea is preparing emergency controls on naphtha exports, including mandatory reporting and shipment restrictions, as the blockade of the Strait of Hormuz continues to choke Middle Eastern supply lines and destabilise domestic petrochemical operations.

Operational strain intensifies as feedstock flows stall

The policy shift follows mounting production disruptions across the sector. South Korea typically sources around a quarter of its naphtha from the Middle East, leaving the supply chain acutely exposed to the current dislocation.

On 23 March, LG Chem shut one of its naphtha crackers in Yeosu after feedstock inflows faltered. Elsewhere, YNCC’s olefins conversion unit (OCU) has also gone offline due to delayed imports, underscoring the breadth of the disruption.

Seoul moves to stabilise supply-demand balance

In response, the Ministry of Trade, Industry and Energy is finalising an “Emergency Supply and Demand Adjustment Plan” centred on tighter market oversight and supply reallocation.

Under the proposed framework, all naphtha producers and importers will be required to disclose production and shipment data, enabling authorities to monitor flows and deter stockpiling. Refiners are also expected to face export restrictions, effectively redirecting volumes into the domestic market to preserve minimum operating rates at petrochemical plants.

To offset higher procurement costs, the government is seeking budget support to subsidise imports from alternative origins. Russia is emerging as a key swing supplier as buyers scramble to diversify away from disrupted Middle Eastern cargoes.

Tight window before relief arrives

The measures are designed as a bridging mechanism until supply normalises. Authorities expect approximately 18 million barrels of UAE crude to begin arriving from 10 April, which—combined with export controls—could extend the domestic supply buffer into late April or early May.

However, risks of downstream contagion remain elevated. Prolonged tightness in naphtha availability threatens to disrupt production chains for polypropylene and higher-value resins such as ABS, raising the prospect of broader supply-demand imbalances across consumer-linked manufacturing sectors.

Written by: Aiman Haikal