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Photo courtesy of Lotte Chemical |
[Alpha Biz= Paul Lee] Seoul, August 26, 2025 — South Korea’s petrochemical industry, which recently announced plans to scale back naphtha cracker (NCC) production capacity by 25% due to worsening business conditions, is now facing an additional financial burden: more than KRW 4 trillion in outstanding loans from foreign banks.
According to financial industry data as of August 23, the combined loan balance extended by 18 foreign banks—including Bank of China, China Construction Bank, and Japan’s Mizuho Bank—to Korea’s top 10 petrochemical firms amounts to KRW 4.066 trillion (approx. USD 3 billion).
Of this total, nearly 70% (KRW 2.856 trillion) is set to mature within a year. Loans due within the next three months alone amount to KRW 1.182 trillion. By country, Chinese banks account for KRW 1.609 trillion of outstanding loans, while Japanese banks hold KRW 935.7 billion.
The challenge lies in whether foreign banks will participate in coordinated financial support measures. Korean financial authorities plan to implement a joint voluntary agreement among domestic lenders next month to allow loan rollovers and maturity extensions for petrochemical companies. However, unlike major domestic banks, the participation of foreign banks in the program remains uncertain.
If foreign banks opt out, industry experts warn that Korean petrochemical companies could face billions of dollars in additional repayment pressure, worsening their already strained liquidity conditions.
알파경제 Paul Lee 특파원(hoondork1977@alphabiz.co.kr)
