MOSCOW (MRC) -- Lotte Chemical reports third-quarter net profit of 148 billion South Korean won (USD131.7 million), down 30.8% year on year (YOY) from W214 billion, according to Chemweek.
The company recorded operating profit of W194 billion, up 20.4% YOY. Sales were W3 trillion, a drop of 21% YOY.
Lotte Chemical says its olefin segment's operating profit of W79 billion was down 62% YOY. Revenue decreased by 36.6% YOY to W1.2 trillion for this segment owing to a decline in product prices. An explosion at the company's petrochemical complex at Daesan, South Korea, reduced group profit. The complex at Daesan, based on a naphtha cracker, accounts for 21.8% of Lotte Chemical’s sales. It says there was stable demand for hygiene-related products such as masks, hand sanitizers, and transparent partitions. The company projects demand in the fourth quarter to improve because of economic recovery despite the off season at the end of the year. It also forecasts profit to improve after the restart of operations at the Daesan plant within the year.
Operating profit at Lotte Chemical’s aromatics division declined 20% YOY to W6 billion. Sales plunged 43.7% YOY to 376 billion. Sales were pressured by a decrease in product prices caused by declining oil prices and operating-rate adjustments at overseas subsidiaries. Aromatics profit decreased due to oversupply caused by China’s new large-scale para-xylene (p-xylene) and purified terephthalic acid (PTA) plants starting operation, despite improved demand during the polyester peak season.
Operating profit for the polyester unit dropped 65% to W31 billion. Polyester demand in China is weak due to COVID-19, but this was partially offset by a rise in demand for sanitation and disposable items since February. The company projects profit to improve gradually in the onshore polyester peak season despite continued oversupply. For the current quarter, it expects profit for polyethylene terephthalate (PET) to decline due to the off season. Lotte expects spreads of purified isophthalic acid (PIA) to improve because of tight supply.
Operating profit for Lotte's advanced materials unit increased 81.8% YOY to W100 billion. Sales grew by 13.2% YOY to W863 billion. Market conditions improved and sales volume increased due to growing demand for no-contact lifestyle/home appliances, it adds. Market conditions for acrylonitrile-butadiene-styrene (ABS) remained strong due to tight supply in China and its neighboring region. For the polycarbonate (PC) business, compounding products’ profitability stayed stable notwithstanding oversupply in the market.
The company’s Lotte Chemical USA business unit swung to an operating loss of W22 billion, versus an operating profit of W35 billion a year earlier. Sales plunged 54.6% YOY to W64 billion. The company says that profit was depressed by Hurricane Delta in October. Lotte projects operating losses to narrow in the fourth quarter as the plant resumes operations. It expects ethylene glycol market conditions to improve due to some competitors cutting production and polyester demand recovering despite worldwide supply expansions.
Its other business unit, Lotte Chemical Titan Holding, achieved third-quarter net profit of 78.8 million ringgit (USD18.9 million), down 14.7% YOY. Revenue was down 10.4% YOY to RM1.9 billion due to lower selling prices.
As MRC reported before, in H2 October, 2020, Lotte Chemical USA, a joint venture (40:60) of the Malaysian company Lotte Chemical Titan and its parent company Lotte Chemical Corporation, restarted its cracker in Lake Charles in the aftermath of Hurricane Delta's Oct. 9 landfall. This cracker with the production capacity of 1 million mt/year is nearly half-owned by Westlake Chemical. Lotte also restarted its associated 700,000 mt/year monoethylene glycol plant (MEG), market sources said.
Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).
According to MRC"s ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers" inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.