[Conference Call] Lotte Chemical: "Short-term Earnings Improvement to Continue... Negative Outlook Due to High Volatility"

On May 11, Lotte Chemical stated during its first-quarter earnings conference call that "the Basic Materials division turned a profit in the first quarter after a significant improvement in performance compared to the previous quarter. The main factors behind this improvement were the expansion of spreads for major products following Middle East risks and the positive inventory valuation effect resulting from a rise in naphtha prices at the end of the quarter."

The company went on to forecast, "In the second quarter, the tight supply-demand situation is expected to continue temporarily, allowing the short-term improvement trend to persist." However, it also anticipated that "as the sharply increased naphtha procurement prices after the war begin to be reflected in actual production input costs, a negative lagging effect will occur."

Additionally, the company noted, "Given the high volatility of the ongoing Middle East war, it is not easy to provide a short-term outlook for this year's performance," adding, "With new capacity additions continuing in China, the petrochemical market conditions are unlikely to be significantly positive even through 2027 to 2028."

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