Korea’s petrochemical majors rode out global slowdown from virus pandemic through high value-added portfolio.

LG Chem stood out in second-quarter performance in the local petrochemical industry with an operating profit of 571.6 billion won ($483 million), which beat market consensus by a large margin, driven by strong growth in acrylonitrile butadiene styrene (ABS) business.

The global leader in ABS production has steadily increased its output capacity since 2016, reaching 2 million tons per year now. The company has focused on tech-intensive and high-value added products that cannot be easily copied by Chinese rivals. This strategy worked in the second quarter when many general-purpose products makers were hit by the pandemic.

Thanks to increased production of lucrative products and a recovery in Chinese market demand, LG Chem’s operating margin in petrochemical business posted a double-digit increase for the first time in five quarters.

Kumho Petrochemical experienced a sharp increase in both sales and operating profit driven by NB latex business it has been grooming since 2016. NB latex based on synthetic rubber is a high-value added product used to make medical gloves. Strong sales of NB latex more than offset a loss from its mainstay car tire business which was hit hard by the pandemic.

SKC saw its Q2 operating profit soar by 65.2 percent from a quarter ago thanks to upbeat sales from copper foil for electric vehicle batteries and propylene glycol (PG) for hygiene products among others. SKC is the first Korean company to commercially produce propylene oxide, which is a raw material for cosmetics and pharmaceuticals. PG is also based on propylene oxide. The company recently expanded its production capacity of PG for high-end products from 15 percent to 20 percent, targeting the market changed by COVID-19 in the second half.

SK Chemicals is another chemical giant whose second-quarter performance exceeded market consensus. Its main contributor was a new transparent material which is now widely used for facial protection equipment for healthcare professionals and containers to store alcohol-based disinfectants against COVID-19.

By Won Ho-sup and Minu Kim

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