Overview

U.S.-Korea Import and Export Figures          

The category with the highest imports from the U.S in 2022 is pharmaceuticals with $2.01 billion (44.51%), followed by cosmetics and fragrances with $422 mil (9.36%) and dyes and pigments with $345 mil (7.64%).  (Unit: $1K, %)

Source: Korea Customs Service (Unit: $’000, metric ton, %): Source: Korea Customs Service

Korea’s Chemical Imports from the U.S. by Category

The category with the highest imports from the U.S in 2022 is pharmaceuticals with $2.01 billion (44.51%), followed by cosmetics and fragrances with $422 mil (9.36%) and dyes and pigments with $345 mil (7.64%).  Unit:  $1K, %)

Source: Korea Customs Service

Korean Market Overview

Korea’s chemical industry, which accounts for 14.3 percent of the country’s manufacturing production and 17 percent of Korea’s exports, is divided mainly into petrochemicals, specialty chemicals, and plastics in Korea. Korea’s chemical industry is a vast industry that ranks 5th in terms of shipment volume and boasts a scale of about $158 billion occupying 4.0 percent of the world market.

Korean chemical companies are world-class, with five companies in the global ranking Independent Chemical & Energy Market Intelligence (ICIS) Top 100 Chemical Companies (ICIS, Sep. 2021). With a capital and technology-intensive structure, Korea’s specialty chemical industry can sufficiently supply stable and high-quality materials to various domestic downstream sectors such as secondary batteries, automobiles, and displays.

Korea imports raw materials to process and re-export them to third countries. Imported chemicals are essential in producing some of Korea’s top exports, including semiconductors, electronics, wireless communication equipment, flat display, computers, automobile/auto parts, ships, plastics, and petrochemicals. Korean manufacturers have long been conservative in changing supply channels, which often require modifying the production process. However, Korean manufacturers, especially in the electronics and semiconductor sectors, have been diversifying suppliers and investing substantially in domestic technologies after Japan’s export bans in 2019 on raw chemicals for semiconductor production.

Korean Market Status

Several issues have emerged in the past 3-4 years, such as global environmental regulations, post-pandemic supply chain reorganization, and moves towards high-value-added materials. The industry is exposed to omnidirectional crises, including oversupply, implementation of carbon-neutral targets, deterioration of the raw material supply environment, and stricter regulations on plastic use. As a result, improving the competitiveness of the domestic chemical industry has become a significant challenge.

At the same time, Korea’s specialty chemical market faces new issues from China’s unreliable energy supply, environmental safety controls, and lack of original technologies. The technological level of dyes & pigments from domestic producers appears to be on par with other advanced countries. Still, Korea lags in developing specialty chemicals that require accumulating fundamental core technologies acquired by substantial R&D investments and time. As a result, market demand for sophisticated specialty chemicals presents opportunities for foreign exporters.

Korean Government Plans

The Korean government is currently planning a “high value-added chemical material development project” focusing on semiconductors, displays, and secondary batteries. The Ministry of Trade, Industry and Energy (MOTIE) invited governmental and industrial experts to its launch of the ‘Chemical Industry Forum’ in January 2023. Under the government’s leadership, five subcommittees have been established, namely ‘Petrochemistry,’ ‘Plastics,’ ‘Specialty Chemicals,’ ‘Supply Chain,’ and ‘Infrastructure.’

The primary roles of the ‘Specialty Chemicals Division’ are (1) seeking support by strengthening R&D of core materials for the five strategic downstream industries, such as semiconductors, displays, future cars, and energy, which are currently dependent on imports from technologically advanced countries, (2) discovering and fostering 30 Korean materials companies with high growth potential, and (3) establishing a “chemical material production platform” to provide support on product traceability records to reduce time and cost by developing advanced chemical materials using digital convergence technology.

In addition, the government has announced that it would review enacting the ‘Chemical Industry Eco-friendly Conversion Promotion Act (tentative name)’ to promote investment in the chemical industry and preemptively respond to global market regulations.

Opportunities

U.S. chemical exports receive duty-free benefits under the Free Trade Agreement between the United States and Korea. However, Korea’s regulatory environment, however, presents challenges to U.S. companies in terms of significant administrative and technical burdens. Frequently raised regulatory issues include protection of confidential business information in accordance with the Act on Registration and Evaluation, etc., of Chemical Substances in Korea (also known as K-REACH). Foreign manufacturers exporting chemicals to Korea should comply with pre-notification and registration per the Act on Registration and Evaluation of Chemical Substances. Korea has been a proven market for U.S. chemical materials for pharmaceuticals, cosmetics, and surfactant products. However, U.S. raw and intermediate materials have relatively limited penetration for Korea’s top export items, such as semiconductors, electronics, flat displays, and computers. Japanese chemical companies have been the principal chemical suppliers within the IT and electronics sectors by taking advantage of its geographical proximity. However, during an export ban on semiconductor materials by Japan to Korea 2019-2023, the Korean market showed more flexibility in diversifying the supply chains. However, with the recent announcement of South Korea and Japan re-listing each other as preferred trade countries, changes in supply chains are expected as Korea’s import dependence on Japan’s key chemical products may increase. Despite Korea’s status as the world’s 5th production scale in 2022, the demands for high-quality, sophisticated chemical products and associated substance production present lucrative opportunities to U.S. chemical manufacturers.  Korea’s dependence on U.S. pharmaceuticals increased by 39.84 percent between 2020 and 2021 due to deregulation and a surge in demand during the pandemic.

Sub-Sector Best Prospects 

·        Specialty chemicals for the medical and pharmaceutical industries

·        Specialty chemicals for the cosmetics and fragrance industry

·        Specialty chemicals for dyes and pigments

·        Specialty chemicals for information communication technology (semiconductor/display/automobile)

Trade Shows and Seminars 

·        Chemical Manufacturing Expo Korea (March 22-24, 2023)

·        Korea chemical Plant Equipment & Processing Exhibition (April 18-21, 2023)

·        Cosmetic Ingredient & Technology Exhibition (April 18-21, 2023)

·        Chemical Substance Management Association Seminar by KCMA (September 2023)

·        Korea ESG Eco-Friendly Exhibition 대한민국 ESG 친환경대전 (k-eco.or.kr) (Oct 11-13, 2023) 

·        International Coating, Adhesive, and Film Industry Expo https://chemexpokorea.com/ (Mar 20-22, 2024) 

·        International Hi-Tech Surface & Painting Expo https://eng.chemexpokorea.com/surtech/ (Mar 20-22, 2024) 

·        International Chemical & Bio Equipment Expo (Mar 20-22, 2024) 

Table: Key Links for Chemical Substance/Toxic Related Sites 

Key Contacts 

·        Ministry of Environment.

·        National Institute of Environmental Research (NIER) https://www.niehs.nih.gov

·        Korea Specialty Chemical Industry Association (KSCIA) 

·        Korea Research Institute of Chemical Technology (KRICT) https://www.krict.re.kr/eng/

·        Korea Chemicals Management Association (KCMA)  http://www.kcma.or.kr/main/main.asp

·        Korea Chemical Industry Council (KCIC) www.kocic.or.kr

·        Korea Petrochemical Industry Association (KPIA)  [ANNEX] https://www.kpia.or.kr/en/main

Detailed numbers and information can be verified on the Korea Customs Service website using the following codes: https://unipass.customs.go.kr/clip/index.do 

Local Contact

U.S. Commercial Service Korea   
U.S. Embassy Seoul
188 Sejong-daero, Jongro-gu
Seoul 03141, Korea
Tel: 82-2-397-4535
office.seoul@trade.gov

https://www.trade.gov/south-korea