Petrochemical Industry, Hit Bottom... Rebound Escaping Deficit

[Image source=Yonhap News]

[Asia Economy Reporter Park So-yeon] GS Caltex has escaped the large-scale deficit pit of the first and second quarters and succeeded in turning a profit in the third quarter.

The refining industry, which hit rock bottom in the first half due to the direct impact of the novel coronavirus infection (COVID-19), is showing a full-fledged rebound from the third quarter.

According to the refining industry on the 14th, GS Caltex recorded an operating profit of 297.1 billion KRW and sales of 5.4577 trillion KRW on a consolidated basis in the third quarter of this year.

Operating profit and sales decreased by 7.8% and 39.0%, respectively, compared to the same period last year. Compared to the second quarter, which was severely impacted by COVID-19, operating profit turned positive and sales increased by 17.7%.

The net profit for the third quarter also turned positive compared to the previous quarter, recording 265.3 billion KRW.

By segment, the refining division posted an operating profit of 246.7 billion KRW and sales of 4.2745 trillion KRW. Operating profit turned positive compared to the previous quarter, and sales increased by 23.0%.

The company explained that profits related to inventory and increased sales of high-margin products, along with flexible business operations according to market conditions, improved performance.

The petrochemical division recorded an operating loss of 13.6 billion KRW and sales of 882.8 billion KRW. Due to weak product spreads, operating profit turned to a loss compared to the previous quarter, and sales decreased by 1.6%.

The lubricants division posted an operating profit of 64.0 billion KRW and sales of 300.4 billion KRW, increasing by 15.8% and 13.3%, respectively, compared to the previous quarter. The recovery in lubricant demand slightly improved performance.

Looking at the third-quarter refining industry earnings announcements, which concluded with GS Caltex, although still under the influence of COVID-19, a clear trend of performance rebound was confirmed.

GS Caltex succeeded in turning a profit in the third quarter, and Hyundai Oilbank was the only company in the industry to achieve consecutive profits in both the second and third quarters. Hyundai Oilbank's third-quarter operating profit was 35.2 billion KRW.

SK Innovation recorded an operating loss of 28.9 billion KRW in the third quarter. After posting a record worst loss of 1.7752 trillion KRW in the first quarter, the loss decreased significantly to 439.7 billion KRW in the second quarter and 28.9 billion KRW in the third quarter, with the petroleum business turning profitable in the third quarter.

S-Oil also reduced its third-quarter operating loss by more than 100 billion KRW from the previous quarter, recording a loss of 9.3 billion KRW.

International oil prices, which plunged earlier this year, stabilized from the second quarter, and losses related to inventory decreased, improving profitability in the refining industry; however, weak refining margins persist.

According to the industry, refining margin improvement is expected in the fourth quarter due to increased demand, but the extent of improvement is expected to be limited due to concerns over a resurgence of COVID-19.

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