Nexen Chooses Location for New Plant Construction

Nexen is determining the best location for building a new tire factory outside of South Korea and is considering a large number of options, including the US, East Asia, and Latin America. Plans to localize production in the United States were announced as early as 2023, but after that, the company began to explore the possibility of opening a new factory in developing countries, since high investment and labor costs would make it difficult to ensure the competitiveness of the site in the US, reports the Seoul Economic Daily (SED).

"Building a factory in the US would require 3 trillion won (2 billion dollars), while in countries like Thailand, where global tire companies are concentrated, the cost is reduced to a third of this amount," an industry representative told SED. "Considering the availability of labor and labor costs, it is likely that the company will decide to open a factory in countries with lower production costs and export tires to the US."

Currently, Nexen owns four tire factories located in South Korea (in Yangsan and Changnyeong), China (in Qingdao), and the Czech Republic (in Žatec). The total capacity of the factories as of the end of last year was 47.518 million tires, and the need for new production is due to the fact that their load is approaching 100%.

In the first quarter of 2026, the Czech factory operated at 98.9% capacity, while the enterprises in Yangsan and Changnyeong had a capacity utilization rate of 90.6% and 94.1%, respectively, and the Qingdao site had a capacity utilization rate of 87.8%. Thus, the average production capacity utilization rate was 92.8%.

SED notes that for a long time, the world tire industry has been led by companies such as Michelin, Continental, and Pirelli, which have an unreachable level of technology for others, however, Korean players - Hankook, Kumho, and Nexen - have quickly gained a foothold in the market, offering products "in terms of characteristics comparable to the tires of leading brands, but offered at prices almost half as low". Thanks to this, the Koreans, in particular, have more freedom to raise prices, and at the end of April, Nexen announced that it would increase the cost of its tires by 5% in Europe, Latin America, and the Asia-Pacific region.

Another positive factor for Nexen is that on June 18, the European Commission is expected to impose anti-dumping duties on imports of passenger and light truck tires from China. Nexen itself also supplies tires of Chinese production to the region, but for the company, the tariff was set at a reduced rate - 29.9%.

Analysts say that if the influx of cheap Chinese tires into the European market is blocked, this will create favorable conditions for Nexen and other Korean brands. During the year, Nexen supplies about 3 million tires to Europe from its factory in Qingdao, and 2 million of them can be produced at other enterprises, which limits the direct impact of duties.

"The import of Chinese tires to Europe is already decreasing, and demand in the domestic market will begin to grow actively in the second half of the year," an industry participant told SED. "Thus, conditions are being created in which Korean manufacturers will be able to increase capacity, already having a guaranteed demand."

Nexen's expected revenue in 2026 is 3.3801 trillion won (2.3 billion dollars), which is approximately 6% more compared to 2025. It is also expected that the company's operating profit will grow by 16.9% to 199 billion won (130 million dollars).