Lotte Chemical's Q1 income projected to have exceeded full 2020 earnings

South Korea’s chemical giant Lotte Chemical Corp. has turned around after a disastrous year due to Covid-19 fallout and accident at its main Daesan plant, earning full 2020 income already in the first three months.

According to financial market tracker FnGuide Inc., Lotte Chemical is projected to have recorded an operating profit of 481.5 billion won ($431 million) on revenue of 4.07 trillion won in the first quarter, surpassing its 353.3 billion won profit for full 2020. Its bottom line will easily shift back to black after losses of 86 billion won a year ago.

Output has increased as its Daesan plant in Seosan is up and running at full capacity since December after a nine-month halt from explosion accident in March last year.

Daesan Naphtha Cracking Center, which produces 1.1 million tons of ethylene per year, is responsible for 20 percent of the company’s total revenue.

The sharp rise in ethylene price also bodes well for Lotte Chemical’s earnings. Extraordinary weather in the U.S. earlier this year pulled the plug on many petrochemical plants including Exxon Mobil, driving up demand for ethylene. The earthquake which shuttered Japanese petrochemical producers in February has also played a part.

Ethylene is now priced at $1,100 per ton, versus $900 at the end of last year. The price of plastics made from ethylene has also jumped two to five times.

The advanced material division is extending gains in earnings on strong demand for pandemic-related medical products.

High transparent medical polypropylene (PP), which is essential to producing syringes, Covid-19 diagnostic kits and research kits, already sold 10,300 tons in the January-March period, nearing the sales volume of 11,396 tons in full 2020.

Lotte Chemical is the sole manufacturer of high transparent PP for medical purposes.

Demand for synthetic resins such as ABS and polycarbonate (PC) are also solid on the back of increased demand for home appliances.

The company’s Malaysian subsidiary LC Titan is also projected to have recorded best earnings of 100 billion won in the first quarter and LC USA, its U.S. subsidiary is also estimated to have turned to profit thanks to recovery in the price of Mono Ethylene Glycol (MEG), an ingredient for the production of plastics.

Lotte Chemical shares closed Monday up 1.19 percent at 297,000 won in Seoul.

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