Korea’s Lotte Chem paints gloomy petchem outlook for 3Q

South Korean petrochemical producer Lotte Chemical plans to continue investing in various production capacities, including chemical recycling, even as it predicts a gloomier outlook for the petrochemical industry in this year's third quarter.

This comes after its basic chemicals unit reported a loss of 8bn South Korean won ($6.13mn) in the second quarter, down from a profit of W326bn a year ago. The loss was because of weak global demand and a sharp rise in feedstock costs, the firm said last week. Lotte Chemical also conducted maintenance at its 1.2mn t/yr cracker in Yeosu from 9 May to 23 June, which weighed on production during April-June, it said.

Lotte Chemical expects a gloomier third-quarter outlook despite lower feedstock costs resulting from falling naphtha prices. It predicts that global demand will weaken further because of inflation and a resurgence of Covid-19 cases.

But this is not deterring the firm from making production investments.

The producer is investing W77bn in a polyethylene terephthalate (PET) chemical recycling plant in Ulsan, with an expected capacity of 45,000 t/yr for Bis (2-hydroxyethyl) terephthalate (BHET) and 110,000 t/yr for chemically recycled PET. The plant will come on line in the second half of 2024, Lotte Chemical said.

Lotte Chemical is also investing W60bn to build a 100,000 t/yr carbon capture and utilisation (CCU) facility in Daesan, which is planned to come on line in the second half of 2023. It plans to use the captured CO2 as a feedstock to manufacture high-purity ethylene carbonate and dimethyl carbonate, which are electrolyte solvents for electric vehicle batteries, as well as sell the CO2 for use as dry ice and as a raw material for semiconductor cleaning solutions.

The firm, along with five other South Korean companies including SK Energy and private-sector firm GS Energy, recently signed an initial agreement with Malaysian state-owned energy firm Petronas to develop a cross-border carbon capture and storage project.

Lotte Chemical and GS Energy are separately building bisphenol A (BPA) chain units at Lotte's petrochemical complex in Yeosu, 450km south of Seoul, that were planned to come on stream in 2023. But these units are now planned for launch in the first half of 2024, Lotte Chemical said, without providing a reason for the delay.