South Korea turns to Russian naphtha as chip supply chain faces Middle East crisis

"South Korea imports about 45 percent of its naphtha, a critical petrochemical feedstock, with roughly 77 percent of those imports historically arriving from the Middle East. That supply line is now, for all practical purposes, severed."

"LG Chem had already been forced to shut down the No. 2 naphtha cracker at its Yeosu complex, an 800,000 tonne-per-year facility, after it could no longer secure sufficient feedstock."

"The purchase of 27,000 tonnes of Russian naphtha by LG Chem is not a strategic pivot but an act of triage, made possible by a temporary US sanctions waiver."

Iran's closure of the Strait of Hormuz has significantly impacted global oil and gas flows, leading to a spike in crude prices. South Korea, reliant on Middle Eastern naphtha for its semiconductor industry, faces severe disruptions as 77 percent of its naphtha imports come from that region. LG Chem's recent purchase of Russian naphtha marks a temporary solution to the crisis, as the company has already shut down a major naphtha cracker due to supply issues. Other companies are also declaring force majeure on contracts, indicating widespread industry challenges.

Read at TNW | Asia