Korean media: South Korea's monthly exports exceed $8 billion for the first time in March... up 48% year-on-year. What exactly is naphtha?

In March, South Korea’s monthly export volume broke through the $8 billion mark for the first time in history. This was largely driven by chip exports, which surged more than twofold year-on-year. In contrast, energy and Middle East-related sectors have begun to suffer negative impacts on export performance due to the ongoing Iran conflict.

On the 1st, the Ministry of Industry, Trade and Energy released its "March Import-Export Trends," showing that exports reached $86.3 billion, a year-on-year increase of 48.3%, setting a new record for a single month. Imports amounted to $60.4 billion, up 13.2% year-on-year, resulting in a trade surplus of $25.4 billion—also reaching a historical high.

The core driver behind South Korea’s export surge is chips. Chip exports totaled $32.8 billion, surging 151.4% year-on-year and breaking through the $30 billion threshold for the first time. This growth stems from increased investments in AI servers, renewed demand for general-purpose servers, and soaring memory prices. In fact, DDR and NAND prices have risen 6 to 8 times over the past year, with both unit prices and volumes increasing simultaneously.

Main product categories such as automobiles, secondary batteries, and computers also saw balanced growth. In particular, rising demand for enterprise SSDs caused computer exports to skyrocket by 189%. Additionally, consumer goods including cosmetics and agricultural and aquatic food products achieved their highest-ever March performance.

Meanwhile, the energy and petrochemical sectors were clearly impacted by the war. Although crude oil export values rose by 54.9% due to soaring prices, gasoline, diesel, and kerosene exports were restricted starting March 13th, leading to reductions of 5%, 11%, and 12% respectively. In the fourth week of March, petrochemical exports dropped by 17%.

Performance across regions also showed significant divergence. Exports to China and the U.S., centered around chips, grew by 64% and 47% respectively; however, exports to the Middle East plummeted by 49% due to logistical disruptions.

The war’s impact on imports was equally evident. Despite rising oil prices, blockades at the Strait of Hormuz led to reduced import volumes, causing South Korea’s crude oil imports to fall 5% year-on-year to $6 billion. A ministry official commented: “While exports are growing, uncertainties stemming from unstable supply chains and rising oil prices continue to expand.”

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From the toothbrush you pick up the moment you wake up, to your lipstick on the vanity, the functional shirt you wear to work, and even the filter layer in a mask that saved lives during the pandemic—these all rely fundamentally on naphtha. Naphtha isn’t just used in daily life. It serves as a solvent in oxygen cutting machines at shipyards for slicing thick steel plates, enables lightweight yet strong interior materials for automobiles, and is essential in special cleaning agents used in semiconductor manufacturing. Its applications in industrial settings are nearly ubiquitous. Virtually every item humans eat, wear, or use contains naphtha—truly surpassing “industrial rice” to become the “cell of civilization.”

¬ During the heating process of crude oil, various types of oils—like different siblings—form at distinct boiling points. Starting from LPG produced at the lowest temperature, then a mixture of naphtha and gasoline as temperatures rise, followed by kerosene, diesel, and heavy oil. In the early days of the petroleum industry in the mid-19th century, only kerosene for lighting received attention. Naphtha, due to its low boiling point and high explosion risk, was considered a “useless and dangerous byproduct” and often discarded. It wasn’t until the 20th century, when chemical engineering flourished globally, that this ugly duckling transformed into a swan supporting modern civilization.

¬ Converting naphtha into other substances is akin to modern alchemy. Inside massive reactors, naphtha is heated beyond 800°C, where carbon chains break apart, releasing a cascade of basic raw materials. Ethylene can be used to produce transparent films or cosmetic containers; propylene forms takeout boxes or appliance casings. After processing via para-xylene (PX), it can also yield polyester fibers and PET bottles.

¬ The ongoing Middle East war has triggered red alerts in the naphtha supply chain, turning it into “golden naphtha.” Though South Korea produces no crude oil domestically, it ranks as the world’s fourth-largest petrochemical power after processing and exporting naphtha globally. Forty-five percent of the naphtha required for production is imported, with 70% coming from the Middle East. The war-induced shortage has pushed plastic and fiber factories—dependent on naphtha—toward closure, leaving operators desperate. Restaurant owners began stockpiling takeout containers, while ordinary households started hoarding trash bags in advance.

¬ Ultimately, the government stepped in. Starting March 27th, all naphtha exports were banned, and an additional budget of 469.5 billion KRW (approximately RMB 2.13 billion) was allocated to secure naphtha supplies. One misstep could bring the industrial heart to a halt. Even in the era of carbon neutrality, countries loudly advocate “moving away from oil,” but imagine life without naphtha—from today’s lunchbox to tomorrow’s clothing—how unimaginable it would be. The lesson of the “naphtha crisis” is that a single shock can easily disrupt what we once took for granted. But is it only naphtha? Surely not.

Source: Chosun Ilbo

Original article: toutiao.com/article/1861367194791936/

Disclaimer: The views expressed in this article are those of the author(s).