Korea 2017 -- setting the scene

Since Urethanes Technology last visited Korea in 2015, the polyurethane industry in Korea has continued to grow in the areas where it touches the automotive industry, but signs of maturity are beginning to show in other sectors.

The Korean polyurethane industry is well back-integrated into poyols, MDI and TDI, according to figures supplied by Polyurethane World (PW), the local language polyurethane publication.

It is a country dominated by rigid applications for polyurethane foam, the numbers show, and that remains largely unchanged up to 2015. In 2005, demand for rigid material at around 168 kT/year was 68 kT/year larger than demand for flexible materials at 100 kT/year. By 2015, rigid demand was running at 196 kT/year, and flexible at  approximately 129 kT/year.

This is driven by the structure of the consuming industries for both flexible and rigid foams.

The flexible sector is unusual because, unlike other industries in the West where slabstock is the largest volume use, the automotive sector is consistently the largest end-use sector for the materials, with more 70% of flexible foam consumption, according to figures from PW.

That local language publication puts the automotive industry’s share of flexible foam consumption at between 70% and 75.6% of consumption between 2005 and 2015. In absolute terms, PW suggests that consumption in the automotive sector reached a peak at 97.8 kT in 2015. There was a small fall to 93 kT in 2016, it said.

The export-driven Korean automotive sector grew by 39.3% between 2005 and 2015, the figures show. This was about eight times faster than the furniture/bedding sector, which experienced growth in consumption from 17.5 kT in 2005 to 18.5 kT in 2015. The automotive sector’s consumption of PU grew at twice the rate of the next fastest growing segment, garment/footwear. This increased from 3 kT in 2005 to 3.6kT in 2015, the numbers show.

Rigid foam keeps on growing

Consumption by the rigid foam increased from 168 kT in 2005 to 196 kT in 2015. However, there are two growth drivers for rigid foam: export-driven refrigeration and domestic construction.

Taking refrigeration first, demand grew from 74.8 kT/year in 2005 to 86 kT/year in 2015, an increase of about 15% or 11 kT/year. This was supplemented by the construction sector, where annual demand increased by 13 kT/year from 82 kT to 96 kt/year between 2005 and 2015, according to the figures from PW.

These two sectors have been the most resilient between 2015-2016, each adding 500 tonne/year demand.

Korea is showing increasing signs of maturity as a manufacturing sector, at least in terms of polyurethane consumption. Demand growth between 2005 and 2010 was 15.6% as the total volume of rigid and flexible polyurethane grew from 267.5 kT/year to 309.3 kT/year in the period.

PW figures show that growth slowed to around 5% between 2010 and 2015, adding a further 16 kT/year during that time.

Integrating backwards

The sole producer of propylene oxide in the country, according to PW, is SKC, with 310 kT/year capacity. KPX Chemical has the largest polyether polyol capacity, with around 210 kT/year, followed by MCNS with 180 kT/year, Kumho Chemical with 135 kT/year and Kukdo, which has 110kT/year overseas capacity. Both KPX with 70 kT/year and Kumho with 130 kT/year have overseas/Chinese polyol capacity. If both domestic and overseas production is included, then Korean companies have 835 kT/year polyether polyol capacity.

There is one other company producing polyols in the country: BASF with 90 kT capacity.

The polyether polyol segment is the only area where Korean businesses have chemicals production outside the country, according to PW.

Total polyester polyol capacity in Korea is 100 kT, split between Seho Tech and Aikyung Chemicals, with 20kT/year each, and Songwon, with 10 kT/year capacity. All of these companies use home-grown, Korean production technology. There are a number of other producers in the country, and PW estimates that they manufacture a further 50kT/year.

Turning to TDI, BASF, with 160 kT/year, and Hanwah, with 150 kT/year, are the largest producers. They are significantly bigger than OCi, which has 50 kT/year capacity.

MDI capacity in Korea totals 515 kT/year, with BASF the largest producer with capacity for 250kT/year, 10 kT/year more than its rival Kumho. Dow has a very small 25 kT/year plant in the country, according to PW.