Refrigeration oil localized… ‘Competition with global chemical manufacturers’ 

NH CHEMICALS is the manufacturer of industrial base oil (PAG).

We have produced and distributed meta-processing oil which is used in diverse fields such as automobile, steel manufacture and textile industry, including bearing oil, high-pressure natural gas lube and refrigeration oil.

In this market dominated by big US and Japanese chemical companies, we are achieving about 70% of our sales through export under a small-quantity-batch-production strategy.

Recently, we successfully developed eco-friendly refrigeration oil which is used in car air conditioners. Once our manufacturing plant is fully ready until the year after next, we might be able to produce these products which are currently imported from Japan locally.

On November 22, Kim Jeoung-kyu, CEO of NH CHEMICALS, was awarded the ‘124^th Entrepreneur of the Month for Bright Korea’ from the KITA. 

Kim Jeoung-kyu (2^nd from the left), CEO of NH CHEMICALS, is awarded the ‘124^th Entrepreneur of the Month for Bright Korea’ from the KITA. 

(From the left) Bae Soo-cheon (Vice Chairman of the Association of Entrepreneurs of the Month for Bright Korea), CEO Kim Jeoung-kyu, Han Jin-hyeon (Vice Chairman of KITA), Chung Yeong-jae (Vice Chairman of the Association of Entrepreneurs of the Month for Bright Korea) | by KITA

‘Customized Production’ as the greatest competitive advantage 

NH CHEMICALS succeeded in localizing the production of APG in 1998. At that time, domestic industry was fully dependent upon foreign technologies. In the Republic of Korea, there is no business but NH CHEMICALS, producing these products.

In this market currently dominated by foreign chemical giants such as BASF and DOW, NH CHEMICALS has produced and provided customized products.

If a client wants a particular color on hydraulic oil, we make the oil according to such need.

CEO Kim Jeoung-kyu said, “In case of oil with high viscosity, some clients request particular packaging for easy transportation.” He added, “We remain competitive by focusing on such niche market from material blending to packaging.”

To enhance price competitiveness, we target to build a new factory. We are going to build our new plant in Onsan National Industrial Complex until May the year after next. Then, we are able to increase the annual production of base oil from 30,000t to 60,000t.

CEO Mr. Kim said “Once our new plant is ready, we will be the world’s top 3 in terms of base oil production.” He continued, “So far, we have concentrated on a niche market only. From now on, we are going to compete with global chemical giants with price competitiveness.”

Successfully localized the production of refrigeration oil 

Recently, NH CHEMICALS successfully localized the production refrigeration oil for car air conditioners. Refrigeration oil for air conditioners is used together with a coolant for smooth air-conditioner operations.

In fact, this market is dominated by IDEMITSU KOSAN, Japan. HANON SYSTEMS, one of NH CHEMICALS’ clients, has also imported such oil from Japan.

NH CHEMICALS has eventually developed refrigeration oil through continued R&Ds from June 2015 to May last year. Compared to conventional products, this oil is much more durable and produced in an eco-friendly fashion. We obtained a patent in the U.S., and Japan as well as in the Republic of Korea. We also have patents pending in China.

CEO Mr. Kim said “More people started to realize the negative effects of freon gas which is produced from an air conditioner. At the same time, regulations on such refrigerants have become stricter.” He continued, “Our products are eco-friendly and compatible with new refrigerants. We expect a gradual increase in a demand for our products.”

Once the construction of our manufacturing plant is done, we are going to provide refrigeration oil for car air conditioners to HANON SYSTEMS. We plan to increase annual production gradually, starting from 1,600t. It is about KRW 10 billion, a half of the amount imported by HANON SYSTEMS from Japan.

CEO Mr. Kim said “First, we are going to increase our domestic market share. Then, we will gradually increase our export volume.” He continued, “We also plan to provide refrigeration oil for building air conditioners as well as for car air conditioners.”

By Reporter Nah Su-ji (suji@hankyung.com)