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Chemicals

Hanwha moves forward in challenging Hu-Chems in nitric acid market

Impact on Hu-Chems expected to be minimal in a market where demand is disproportionately higher than supply

By Sep 27, 2021 (Gmt+09:00)

2 Min read

Hu-Chems nitric acid production facilities in Yeosu city, South Jeolla Province, South Korea.
Hu-Chems nitric acid production facilities in Yeosu city, South Jeolla Province, South Korea.

Hanwha Corp. is pushing forward with its plan to challenge Hu-Chems Co. in the industrial nitric acid sector as its attempt to acquire the chemical company has failed.

According to the chemical industry on Sept. 26, Hanwha is currently building a nitric acid production plant by 2024 with an annual capacity of 400,000 tons in Yeosu Industrial Complex, located about 300 km south of Seoul, as part of its long-term business plan announced in April.

In April this year, Hanwha had revealed its plan to build the Yeosu facilities by investing 190 billion won ($162 million). Once the new plant is completed, Hanwha will have an annual nitric acid production capacity of 520,000 tons.

On the other hand, the country’s dominant market leader Hu-Chems has an annual capacity of 1.1 million tons. The company with the current capacity has more than a 90% share in South Korea’s semiconductor-grade nitric acid market.

Hu-Chems is currently building a new plant by 2024, also located in Yeosu near Hanwha’s new plant, with an annual capacity of 400,000 tons. The total combined capacity of 1.5 million tons will make Hu-Chems the biggest manufacturer in Asia.

Nitric acid is a key base material used in the semiconductor and chemical industries. Due to a high entry barrier, Hanwha had initially considered a number of other options such as a joint venture with Hu-Chems as well as acquisition.

“It is true that Hanwha tapped us for potential acquisition and other forms of partnership but we turned down their offer,” said a Hu-Chems official.

Hanwha also produces nitric acid in Yeosu city with current annual capacity of 120,000 tons.
Hanwha also produces nitric acid in Yeosu city with current annual capacity of 120,000 tons.

Industry sources say that Hanwha, one of Hu-Chems’ major clients along with OCI and BASF Korea, will terminate the supply contract once it completes the construction of the new plant by 2024.

Hu-Chems says that due to soaring demands for nitric acid, it will have no difficulties in finding another client that would purchase the volume currently being supplied to Hanwha.

“Hanwha’s entry to the market will have little impact on us. The market demand is soaring, as seen by the fact that the volume to be produced by our new plant in 2024 has been already taken by our clients,” said Hu-Chems.

Hu-Chems also plans to enter the hydrogen market based on its expertise in nitric acid. Earlier this month, the company and Gwangju Institute of Science and Technology (GIST) signed an MOU to jointly develop a hydrogen production system from decomposed ammonia.

Ammonia, a base material used in making nitric acid, is a chemical compound made up of nitrogen and hydrogen. Hu-Chems uses about one-third of all ammonia that South Korea imports every year.

“We will strengthen hydrogen business by decomposing ammonia from livestock wastes and wastewater from households,” said Hu-Chems.

Write to Kyung-min Kang at kkm1026@hankyung.com
Daniel Cho edited this article.
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