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South Korean petrochemical producer Lotte Chemical expects low feedstock costs and a gradual recovery in demand to boost its olefins and aromatics profits in the current quarter.
A plunge in naphtha prices amid the Covid-19 pandemic will be better reflected in feedstock costs for April-June than in the first quarter, as those cheaper supplies are put into production, Lotte said. And the company sees the beginning of a recovery in olefins demand in China and the rest of northeast Asia, although demand will remain weak elsewhere in the world.
Lotte also expects demand growth in China for aromatics, as well as seasonal gains, although profitability will remain constrained by oversupply. The company will idle its 500,000 t/yr purified terephthalic acid (PTA) plant in Pakistan for 20 days in the current quarter because of Covid-19 lockdown measures.
The gradually improving outlook comes after Lotte swung to a 90bn won ($74mn) loss in January-March from a profit of W224bn a year earlier as the pandemic slashed product demand and lower oil prices led to inventory losses.
The company also was hit by an explosion in March that damaged its 1.1mn t/yr ethylene cracker in Daesan and disrupted production at its downstream plants in the city. The cracker remains idled, but the company last week restarted polyethylene, ethylene glycol and ethylene oxide adduct plants. Its Daesan polypropylene plant was restarted in mid-March. Operations at the company's butadiene, benzene toluene xylene (BTX) and styrene monomer units in Daesan remain suspended.
Even as Lotte sees market conditions improving in northeast Asia, the company said its ethane-cracking joint venture in Louisiana will continue to be hurt by weak demand, excess supplies and low product prices. The US venture also could see a rise in ethane costs as producers curtail their output.
