LG Chem (051910.KS), South Korea's largest integrated chemicals maker, said on Sunday it will temporarily lower the supply prices it charges small and medium-sized customers by KRW 100,000–200,000 per tonne, passing through a government naphtha subsidy to ease cost pressures on downstream buyers.
What the Price Cut Covers
The reduction applies to May and June 2026 shipments where naphtha is a key feedstock, with the exact discount scaled to each product's naphtha content and prevailing market price. Primary beneficiaries are manufacturers of vinyl films, flexible packaging, and other everyday consumer materials — sectors with limited ability to absorb commodity swings on their own. LG Chem said it has already notified affected customers and the lower pricing takes effect this month.
The discount range translates to roughly USD 72–145 per tonne at current exchange rates, a meaningful offset for small fabricators running on thin margins.
CEO Statement
"This decision reflects our commitment to mutual growth with the small and mid-sized companies that have stood by LG Chem through difficult market conditions," said Kim Dong-chun, president and chief executive of LG Chem. "We also extend our deepest thanks to the government for the unprecedented speed with which it mobilised naphtha support for Korea's petrochemical industry."
Policy Backdrop
The Korean government introduced targeted naphtha relief after feedstock costs squeezed refinery-to-chemical margins through the first half of 2026. Naphtha, the primary hydrocarbon cracker feedstock, represents a large share of variable costs for makers of ethylene, propylene, and derivative plastics. By channelling part of that subsidy into downstream pricing, LG Chem aims to stabilise supply chains for the small manufacturers that form the bulk of its domestic customer base in commodity polymers.
LG Chem at a Glance
LG Chem is the chemicals arm of LG Group and operates across petrochemicals, advanced materials, life sciences, and battery-separator materials. The company has been navigating soft petrochemical demand in Asia while expanding its semiconductor-materials and energy-storage businesses. The SME price-support move comes roughly a week after Korean brokers were reported to be pitching financing structures to LG Chem and EcoPro ahead of EcoPro BM's convertible-bond put deadline in late July.
