Lotte Chemical Held Back by the Monsoon Season

[Asia Economy Reporter Park So-yeon] Lotte Chemical has completed early repairs on equipment damaged in an accident at the Daesan plant, but is anxiously unable to restart operations due to an unusually long rainy season.

According to industry sources on the 7th, Lotte Chemical repaired the Daesan naphtha cracking center (NCC) compressor, which was damaged in a fire accident last March, in Japan, but has not been able to set a restart schedule. The prolonged rainy season lasting over 40 days has caused delays in preparatory work for restarting. It is reported that the tests and step-by-step operational approvals required before full commercial operation are being postponed.

An industry insider said, "The NCC compressor repair was completed faster than expected, so we hoped to advance the restart schedule by about two months, but heavy rains have prevented subsequent work," adding, "This year's rainy season is very long with heavy downpours, making it impossible to carry out preliminary work for equipment operation."

In the second quarter of this year, competitors such as LG Chem and Kumho Petrochemical posted remarkable earnings, making Lotte Chemical even more anxious. Especially as the petrochemical market is gradually recovering in the third quarter, the faster the accident-damaged equipment is restored, the more it can compensate for the poor performance in the first half of the year. Lotte Chemical produces 1.1 million tons of ethylene, 550,000 tons of propylene, and 190,000 tons of butadiene annually through the Daesan NCC. In the fourth quarter of last year, just before the accident, the Daesan NCC process generated an operating profit of 50 billion KRW.

Meanwhile, on the 25th of last month, Lotte Group Chairman Shin Dong-bin visited the Yeosu Plant 1 and ordered strengthening competitiveness through innovation, emphasizing Lotte Chemical's role as the group's 'cash cow.' A Lotte Chemical official said, "In recent years, Lotte Chemical has undergone several consultations with global consulting firms to pursue innovative changes in its future business structure," adding, "We are continuously reviewing the feasibility of new businesses and striving to discover future growth engines."