LG CHEM SEES STABLE PETROCHEMICAL MART

S. Korean firm diversifying products to guard against falling plastic usage

LG Chem, South Korea’s largest chemical company, sees the global petrochemical market being stable this year and is diversifying its products to guard against falling plastic usage, says its chief executive.

Asian petrochemical makers typically use crude oil-derived naphtha as a feedstock to produce ethylene and other basic petrochemicals, which are mostly used to make plastics.

“The petrochemical business is largely affected by oil prices, but now oil prices are stable in the range of US$60 (RM234.75) per barrel after rising for a while,” said Park Jin-soo, LG Chem chief executive officer and vice-president, at a press conference on Friday.

“The market may not be as robust as last year but I think it won’t go bad this year.”

The chief executive also raised concerns over protectionism after United States President Donald Trump proposed tariffs on steel and aluminium, prompting warnings of retaliation from US trading partners.

“We see relatively little impact because our export volume to the US is not that much, however, in the long term we should be prepared for global trade protectionism,” said Park.

On the potential impact of plastic usage bans on the petrochemical industry, Park said demand continued to rise steadily.

“However we have been diversifying our businesses to maintain steady demand regardless of supply or demand changes,” he said.

LG Chem currently operates two naphtha crackers in the southwestern cities of Yeosu and Daesan with a combined 2.2 million tonnes per year (tpy) of ethylene output.

The company said in December it would expand its acrylic and super absorbent polymer production capacity by the first half of next year in a bid to focus on more lucrative petrochemical products.

Apart from the petrochemical business, LG Chem is also one of the major South Korean battery makers, along with Samsung SDI and SK Innovation.

Growth in the battery business, fuelled by the boom in electric vehicles, boosted the company’s sales target to 36.4 trillion won by 2020, from this year’s goal of 26.9 trillion won, Park said.