RoydadNaft –  The heads of petrochemical industry associations from seven Asian countries called for an international cooperation, Friday, to overcome the challenging business environment of recent years.

During the Asia Petrochemical Industry Conference (APIC) 2024 in Seoul, industry leaders from Korea, Japan, Taiwan, Malaysia, Thailand, Singapore, and India acknowledged the challenges posed by global oversupply and increasing protectionism.

Under the theme of “Trailblazing the Path in a Sustainable Era,” the annual conference was held in Seoul for the first time in nine years, as the seven members take turns to host the event.

Korea Petrochemical Industry Association Chairman and LG Chem CEO Shin Hak-cheol said in his opening address that close cooperation is required, as the seven members of APIC have learned to overcome difficulties by working together.

“A technological transition to low carbon-based and high value-added products is absolutely necessary, and the seven APIC members must jointly pursue a long-term competitiveness model that increases both the industry’s profitability and technical differentiation,” he said.

LG Chem recently experienced a downgrade in its credit outlook by S&P Global Ratings, moving from “stable” to “negative,” due to its sluggish profitability. The Korean firm has been carrying out a restructuring of its portfolio to focus more on high value-added businesses.

Shin told reporters before the event that there will be an opportunity for the petrochemical industry’s growth in the long run, anticipating a gradual recovery in the operating rate of his company’s naphtha cracking center.

His view was shared by the heads of petrochemical industry associations from other countries.

“In order to deploy new technologies globally and quickly implement them across society, we need to cooperate across national borders,” Japan Petrochemical Industry Association Chairman Keiichi Iwata said in his opening address. “We should work together in technological development, as well as in the establishment of systems and policies, including standards and specifications.”

The opening remarks were followed by keynote speeches by Olivier Gerard Thorel, executive vice president of SABIC, the Middle East’s largest chemical firm owned by Saudi Aramco, as well as European Chemical Industry Council (CEFIC) Director General Marco Mensink and McKinsey & Company Senior Partner Avinash Goyal.

The McKinsey senior partner described the current situation of the petrochemical industry as a “perfect storm,” saying that an erosion in growth and profits has been observed across Asia.

“Capacity addition will continue to occur throughout 2024 and slow down after 2024, especially outside of China,” he said. “But for Korea, due to its export-dependent economy and industry structure, the impact of overcapacity will last longer.”

He advised industry players to accelerate value creation by using artificial intelligence, look for M&A opportunities and leverage decarbonization as a strategic value creator.