SEOUL, July 23, 2008 – SKC, the leading propylene oxide (PO) and polyester film producer in Korea, announced today that its new PO plant in Ulsan successfully started the world’s first commercial production of PO _ base_d on hydrogen peroxide propylene oxide (HPPO) process. The company has invested over KRW 200 billion into the new PO plant since it entered into a license agreement with two Germany-_ base_d leading global chemical companies, Evonik and Uhde, to use the companies’ HPPO technology in May, 2006.

HPPO-_ base_d PO production is a leading-edge technology that many global major chemical p s have been trying to commercialize in order to solve the drawbacks of existing production methods such as lack of efficiency and potential hazard to environment. The new technology produces only PO with no by-products in any appreciable quantity except water, making it more cost-efficient and environment-friendly technology of choice. Thus, the start of commercial production exhibits SKC’s world-class processing technology and operation capability.

The new PO plant is capable of producing 100,000 tons per year, increasing the company’s total annual PO production capacity to 275,000 tons. As the domestic PO demand is currently estimated at around 300,000 tons per year and to grow 5% per year, SKC’s added capacity can now satisfy more than 90% of the domestic demand. Therefore, the chemical producer ambitiously plans significant growth in domestic market share, up from previous year’s share of 61%, as well as import substitution of over KRW 200 billion previously supplied by foreign producers.

As the new plant is running at 100% of its design capacity and satisfying customers’ test in specifications and quality of its product, SKC unfolds its ambition to become a leader in Asian polyurethane market. As a short-term plan, the company aims to improve productivity of the new plant by 20% by the end of this year, 30% by the first quarter of 2009, simply by improving processing efficiency. By the first half of 2011, SKC plans to expand its annual domestic PO production capacity to 400,000 tons to mainly respond to ever growing domestic demand. In addition, SKC is also actively pursuing international expansion. As the first step, the company is considering establishment of additional 400,000-ton production facilities in China or other Asian countries, where continued shortage in PO supply is forecast.

Jang Suk Park, CEO of SKC, said, “As the supply shortage in PO market is apparent in Asian market for longer term, the world’s first commercialization of HPPO-_ base_d PO production at the new plant poses great opportunity for SKC in further dominance of domestic market as well as expansion into rest of the Asian markets.” He added, “SKC will continue its innovation in the PO market by utilizing its excellence in engineering and plant operation capabilities to establish its leadership in the Asian polyurethane market.”