Halfway through writing this chapter, I looked around my desk. A ballpoint pen, a water bottle, the bezel of a monitor, a mouse, the temples of my glasses. Half of what my eyes land on is plastic. Defense, in the last chapter, was a chain that recovered its price as its customers multiplied. This one is the exact opposite. A giant chain whose customers are scattered across the world — scattered, for that matter, across my own desk — and which still cannot name its price at all. Nearly all the plastic and fiber and rubber in our lives comes from here. Once bundled with autos and refining into the acronym cha-hwa-jeong — cars, chemicals, refineries — and considered incapable of losing, an old pillar of Korean industry. Petrochemicals.
The chain goes like this. Naphtha, drawn from crude oil, is cracked into small pieces inside enormous facilities, yielding a basic substance called ethylene, and that ethylene branches out into every kind of plastic. Korea built these naphtha crackers (NCCs) at world scale. On size alone, it is a perfect wall. And yet this wall cannot name a price.
The Curse of the Commodity
The reason lies in the nature of ethylene as a product. It is a commodity, identical no matter who makes it. No brand, no differentiation. So the price is set not by the company that makes it but by the international market. You may remember how Korea Alcohol Industrial's solvents, despite carrying virtually all domestic production, had a ceiling pressed onto their price by imports. Petrochemicals is where exactly the same principle plays out, at hundreds of times the scale. However large the facility you hold, if someone next door makes it cheaper, it's over.
And right now, the ones who "make it cheaper" are closing in on Korea from two directions at once.
One is the United States. When the shale revolution unleashed a flood of cheap natural gas, America began drawing ethylene straight from that gas. Its costs run far below Korea's, which goes from crude oil by way of naphtha. People in the industry describe the gap this way: what the US makes for a few hundred dollars a ton, Korea makes for somewhere around a thousand. A race lost at the starting line. The other is China. As late as the second half of the 2010s, China was still buying ethylene from Korea; within a few years it built bigger, newer plants without pause and turned self-sufficient. Korea's largest customer had become, before anyone quite noticed, its most fearsome competitor. The courtyard vanished wholesale.
Tearing Down Its Own Wall
The result is the landscape of 2025. Korean petrochemicals is now dismantling its own wall with its own hands.
| 2025 petrochemical restructuring | Details |
|---|
| Government reduction target | 18–25% of naphtha cracker capacity |
| Lotte Chemical, Daesan | 1.1-million-ton facility idled (Feb 2026, business restructuring approval no. 1) |
| Four companies in the Yeosu complex | Proposals submitted to cut at least 2.57 million tons |
| Legislation | Special act on strengthening petrochemical industry competitiveness passed |
The companies that make it best stop their plants first. The leaders in capacity shut down facilities at the head of the line, and the government went as far as passing a special act to assist the retreat. On top of that, much of the domestic capacity is already past thirty or forty years of age — old enough that even repairing it is a burden. The plants that are not fused with a refiner, or that fail to move into specialty materials others cannot make, will in large part be gone within the next ten years. The fortress of cha-hwa-jeong, which once seemed incapable of falling, sets like this.
As an aside, I have seen Yeosu at night. The lights of the industrial complex run on endlessly over the water, and people call it a night view and take pictures. What those lights mostly are is factories that cannot stop even at night. These are facilities that take days to reheat once shut down, so it is less that the lights are never turned off than that they cannot be. Some of those lights will go out, one by one, over the next several years. The night view will get a little darker, and not many people will notice.
Petrochemicals proves this book's touchstone at the grandest possible scale. Neither market share nor the size of the plant guarantees the power to name a price. A country that makes among the most in the world stands helpless before the price of the very thing it makes. The common belief that scale itself is a wall — this giant refutes it with its own body.
The People Who Don't Leave
| Company | Employees | Average annual pay | Average tenure | Revenue per employee | Operating profit per employee |
|---|
| Lotte Chemical | 4,349 | About 98.6 million won | 14.6 years | About 4.25 billion won | About -220 million won (loss) |
| LG Chem (standalone) | 12,869 | About 107 million won | 14.0 years | About 1.42 billion won | About -16 million won (loss) |
* Per-employee figures are rough estimates: FY2025 results divided by disclosed headcount. Lotte Chemical is consolidated (revenue of 18,483.0 billion won, operating loss of 943.1 billion won). LG Chem's consolidated statements sweep in its subsidiary LG Energy Solution whole, so it is calculated on a standalone basis (revenue of 18,216.5 billion won, operating loss of 210.5 billion won; headcount standalone as well). For the deficits, the per-employee loss is recorded as is.
Revenue per employee: 4.2 billion won. Among the numbers this book has broken down to the single person, this ranks near the very top. One person at Lotte Chemical turns over money on the order of a trading-house hand. And at the end of those 4.2 billion, what remains is a loss of more than 200 million won per person. Meanwhile, the pay hovering around 100 million won and the tenure approaching fifteen years remain exactly as they were in the profitable years. I don't have the confidence to call this mismatch anyone's fault. A structure of wages and time fitted to the good years keeps rolling on inertia for a while after the years have changed. The twilight of cha-hwa-jeong may register first not in the large type of capacity cuts and special acts, but in mismatches of timetable like this one. People with fifteen years of tenure will have passed through half of the good years and half of the bad. Which will the fifteen years ahead of them more closely resemble?
Now to the last station of this journey. Every time we have climbed back up a chain, the value kept flowing further up, further upstream. In batteries, to Chinese lithium; in petrochemicals, to American gas. Follow that flow to the end and you arrive at one place. The very bottom of the chain: the world of minerals and raw materials dug out of the ground.
This piece is part of the "Korea Value Chain" series and is an original work. It is an analysis based on public data and industry sources; some figures and assessments are estimates. It is not intended as a direct basis for investment decisions.
By Alexandro Lee · July 2026
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