2Q Record-Breaking Performance... Chemical Industry 'Burning Up'

Kumho Petrochemical Reports Record Q2 Operating Profit... Strong NB Latex and General Rubber
Hanwha Solutions Surpasses Previous Quarter Performance... Caustic Soda Drives Results
LG Chem Focuses on Surpassing 10 Trillion Won Again

[Asia Economy Reporter Hwang Yoon-joo] The chemical industry, led by Kumho Petrochemical and Hanwha Solutions, is expected to make new history in the second quarter of this year following the record-breaking performance in the previous quarter. This is due to the surge in demand for chemical products driven by the recovery of front-end industries such as hygiene products, automobiles, and construction.

According to FnGuide on the 30th, Kumho Petrochemical's operating profit consensus for the second quarter of this year was estimated at 665 billion KRW. This consensus figure is 8.5% higher than the previous quarter, which recorded the highest quarterly performance since the company's founding. Notably, some securities firms have recently raised their operating profit forecasts for Kumho Petrochemical to as high as 870.2 billion KRW, drawing attention.

The reason the second quarter's record performance is anticipated is due to the robust margins of NB latex and the profitability of styrene-butadiene rubber (SBR). It is reported that NB latex exports in May reached an all-time high. In fact, the delivery period for new orders of latex gloves, a front-end industry product, remains at 10 to 12 months, indicating a continued demand surplus. Although the export price of NB latex fell by 2.1% from $2,138 per ton in the previous month to $2,091 per ton, the decline in raw material prices has maintained strong margins.

SBR is also showing strong margins. Kang Dong-jin, a researcher at Hyundai Motor Securities, explained, "The margin for SBR used in tires is at its highest level since 2014," adding, "As the semiconductor shortage issue resolves and automobile production normalizes, SBR prices are expected to remain strong."

Hanwha Solutions is also expected to continue its record-breaking streak in the second quarter. The company's operating profit consensus for the second quarter is estimated at 268.7 billion KRW, a 5.5% increase from the previous quarter. The main driver of the second quarter's performance is caustic soda. Anna Lee, a researcher at eBest Investment & Securities, explained, "The price of caustic soda rose from $220 per ton in the first quarter to an average of $300 per ton in the second quarter, and exceeded $330 last week," adding, "Stable demand growth due to economic recovery has driven up caustic soda prices."

LG Chem's ability to record operating profits in the trillion KRW range in the second quarter is also a point of interest. LG Chem, which surpassed 1 trillion KRW in operating profit for the first time since its founding, has a second-quarter operating profit consensus of 1.2459 trillion KRW. However, some analyses suggest that after accounting for a large-scale recall cost of 400 billion KRW for the Kona electric vehicle, the profit may fall short of the first quarter.

A chemical industry insider said, "Recently, the chemical industry has entered a boom period, with both performance and stock prices reaching their highest levels," adding, "Although there are concerns about supply in the second half, demand for products such as ABS, PVC, and synthetic rubber is expected to be maintained at a certain level due to the anticipated recovery of front-end industries like automobiles and construction."

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