South Korea Takes Emergency Measures to Curb Hoarding of Seven Key Petrochemical Feedstocks as Supply Chain Risks Escalate to National Security Level

On April 14, 2026, the South Korean government announced that from April 15 to June 30, it would implement anti-hoarding measures on seven key petrochemical feedstocks, including ethylene, propylene, butadiene, benzene, toluene, and xylene. Affected companies must keep their inventories at or below 180% of the levels recorded during the same period last year. The introduction of this emergency control measure marks an escalation in the impact of Middle Eastern geopolitical conflicts on the global chemical supply chain—from price volatility to threats against supply chain stability.

Market background: soaring transportation costs and strained raw material supply

With the continued tension in the Red Sea, global maritime insurance rates have increased by 35% to 40%, and insurance costs for some high-risk routes have even doubled. The insurance cost for transporting chemical products from Dubai to Rotterdam has risen from $200 per ton in 2023 to $330 per ton currently. Shipping companies are forced to take a detour around the Cape of Good Hope, causing an average increase of 12 to 15 days in transportation time and a 15% to 20% rise in logistics costs.

The situation in the Gulf region has become even more severe. According to data from Lloyd’s of London, over 15% of Gulf shipping routes have been directly declined for insurance coverage, forcing chemical companies to either choose more expensive alternative routes or assume higher transportation risks.

South Korea's policy shift: From "cracking down on speculation" to "safeguarding liquidity"

As a manufacturing powerhouse heavily reliant on imported raw materials, South Korea’s petrochemical feedstocks are not only crucial to the operations of chemical enterprises themselves but also impact downstream industries such as plastics, fibers, rubber, electronic materials, and automotive parts, ultimately affecting exports and the overall stability of the manufacturing sector.

The latest control measures explicitly specify the timeframe, product scope, and inventory caps, indicating that the policy objective is not merely symbolic but aims to stabilize the second quarter—the most sensitive period. From mid-April to the end of June, global markets are absorbing the impact of Middle Eastern shocks, Asian buyers are adjusting their procurement plans, and petrochemical companies are readjusting their pricing.

Industry analysts note that the South Korean government is attempting to break a vicious cycle: companies hoard supplies to protect themselves → market supply tightens further → prices rise even more. When every company actively builds up inventory out of fear of future price increases or supply disruptions, this collective behavior ultimately intensifies market tensions and further exacerbates the supply-demand imbalance.

The Chinese chemical industry faces a test on its "lifeline"

For China’s chemical industry, the Strait of Hormuz is nothing short of a “lifeline.” Data show that 55% of China’s imported chemical raw materials originate from the Middle East, and 92% of these imports pass through the Strait of Hormuz. Approximately 40% of China’s methanol demand is met through imports, with 85% of that imported methanol also transported via this route. Imports of ethylene and propylene account for 35% of domestic demand, and 78% of these imports transit the Strait of Hormuz. Should supply flows through the Strait of Hormuz be disrupted, Chinese chemical enterprises would not only face rising costs but also confront genuine raw material shortages.

To mitigate this risk, Chinese chemical companies are accelerating supply chain restructuring. For instance, domestic firms are reducing their proportion of methanol imports from the Middle East and increasing procurement from Southeast Asia. Additionally, Chinese shipping companies have launched a new "Middle East–Southeast Asia–China" route that bypasses the Strait of Hormuz, with transportation costs only 12% higher than those of rerouting via the Cape of Good Hope.

Supply Chain Restructuring: From "Cost Priority" to "Security Priority"

The Middle East conflict is accelerating the structural transformation of the global chemical supply chain. Over the past two decades, companies pursued the lowest-cost supply chain layouts globally. Now, the priority is shifting towards resilience and security.

Europe is advancing the construction of the “European Chemical Circle,” while Asia is strengthening the “Asian Chemical Circle,” with both aiming to reduce dependence on transportation from the Middle East. China is also accelerating the establishment of raw material storage centers in Southeast Asia and has launched coal-to-methanol projects in Inner Mongolia and Xinjiang. Once these projects come online in 2027, China’s