South Korean petrochemical maker Lotte Chemical expects a gradual recovery in petrochemical demand and low feedstock costs will support its olefins and aromatics profits in the second quarter. According to the company, profits will increase in the April-June quarter when it uses naphtha purchased at cheap prices caused by the oil price crash amid the coronavirus pandemic.
In addition, the producer sees that demand from China and other Northeast Asian countries would start to recover gradually. However, it projects that demand will remain weak in the different parts of the world. Lotte said that aromatics demand in China is set to grow due to seasonal gains, but oversupply is likely to cap its profitability.
Market sources told SSESSMENTS.COM that the producer would shut its 500,000 tons/year purified terephthalic acid (PTA) unit in Pakistan for 20 days in the second quarter due to the country’s virus containment measures. The company also experienced production disruptions in March after an explosion at its 1.1 million tons/year ethylene cracker in Daesan, which remains idle until now.
As SSESSMENTS.COM noted, Lotte Chemical’s butadiene, benzene toluene xylene (BTX), and styrene monomer production in Daesan remained halted. The producer managed to restart its Daesan polypropylene plant in mid-March, while its polyethylene, ethylene glycol and ethylene oxide plants were restarted last week.
Lotte Chemical reported a loss of KRW90 billion ($74 million) in the first quarter, after recording a profit of KRW224 billion in the same quarter last year. The company attributed the loss to inventory losses due to lower oil prices and weak demand caused by the coronavirus pandemic.
