Isu Chemical, Surge in Hand Sanitizer Demand... Rare Beneficiary of COVID-19

[Asia Economy Reporter Park Jihwan] Korea Investment & Securities evaluated on the 15th that Isu Chemical is receiving an unusual benefit due to the surge in demand for hand sanitizers amid the spread of the novel coronavirus infection (COVID-19).

Lee Doyeon, a researcher at Korea Investment & Securities, explained, "Due to the impact of COVID-19, the demand for hand sanitizers has increased, and the IPA market conditions are also rapidly improving," adding, "Isu Chemical's IPA production capacity is 60,000 tons per year, and with demand surging since last month, the operating rate has reached 120%."

Researcher Lee said, "In the case of the United States, prices have soared to $4,630 per ton due to the sharp increase in demand, which is $3,605 higher than domestic prices," and predicted, "Even if the average selling price of IPA rises by only $1,000/ton, the annual operating profit will increase by about 105 billion KRW."

Isu Chemical's consolidated operating profit last year was 9.4 billion KRW. The IPA profitability, which hovered around the break-even point until early March this year, is now evaluated to have transformed into a high-profit product that can significantly drive the company's overall performance.

The main product, LAB, is also showing positive signs. Researcher Lee said, "Isu Chemical accounts for 7% of the world's production capacity of LAB, which is used as a raw material for laundry detergents," and explained, "Since 2016, there has been no large-scale new expansion, and last year, Japan's JXTG LAB facility, which accounts for 3% of the world's production capacity, was shut down due to aging."

He added, "Although the possibility of margin reduction due to inventory valuation losses in the first quarter cannot be excluded, benefits from cost reductions are expected from the second quarter."

This content was produced with the assistance of AI translation services.