On 9 September, South Korean institutional and corporate investors bought refining and petrochemical shares heavily in Seoul, sending Lotte Chemical up 12.89% intraday to KRW64,800 and Daehan Yuhwa up 11.23%. SK Innovation gained 6.59%, S-Oil 4.71% and LG Chem 3.52%. The sector-wide move was driven by expectations that rising crude and gas prices would lead to tighter petrochemical supply, higher selling prices and wider product margins.
Higher oil prices have traditionally been treated as a cost problem for South Korea’s naphtha-based chemical producers. This time, investors responded differently. The market is betting that energy inflation is beginning to pass through to refined products, monoethylene glycol and selected olefins, allowing selling prices to rise faster than feedstock costs.
That expectation is most visible in MEG. According to the report, monoethylene glycol spreads have reached their highest level since 2021, encouraging hopes that margin improvement could extend to polyethylene and polypropylene. Shares of companies centred on naphtha cracking centres recorded the largest gains, suggesting that investors are focusing on possible product scarcity rather than crude prices alone.
The rally does not, however, confirm that the Korean petrochemical industry has completed a cyclical turnaround. Persistent oil-price increases can still raise naphtha costs rapidly. A durable recovery requires stronger product prices, manageable inventories, stable plant utilisation and downstream demand capable of absorbing the increases.
The development matters beyond South Korea. The country is a major Northeast Asian producer and exporter of olefins, aromatics, MEG, polyethylene and polypropylene. Changes in Korean plant rates and export offers can quickly alter spot availability in China, Japan and Southeast Asia.
For Chinese buyers, the more useful indicators will be regional MEG, PE and PP offers, operating rates, inventories and vessel schedules. If those measures tighten alongside the equity rally, the market will have stronger evidence of a physical supply shift. If they do not, the share-price move may prove to have run ahead of the underlying chemical market.
The quoted gains were intraday figures at the time of the report, and the companies had not issued new earnings guidance linked to the move. For now, the rally is best read as a strong market signal: investors have started trading a petrochemical shortage, while the size and duration of that shortage still need to be confirmed.
