Chemical Industry Unaffected by COVID-19 Recession

[Asia Economy Reporter Hwang Yoon-joo] As the aftermath of the novel coronavirus infection (COVID-19) continues, the chemical industry is bustling. Demand for plastic products such as masks, face shields, and delivery packaging is increasing, and with the resumption of production in upstream industries, both the operating rates of related product facilities and product spreads have risen.

According to the chemical industry on the 19th, recently, Lotte Chemical's acrylonitrile butadiene styrene (ABS) and polycarbonate (PC) facility operating rates reached 100%. Hanwha Solutions Chemical Division's polyolefin (PO) operating rate is also maintaining 100%. LG Chem's PO facility operating rate was confirmed to be an average of 97%.

ABS, PC, and PP are mainly used in plastics, automobiles, and electronic products. As industries such as automobiles and mobile phones, which use ABS, PC, and PP as raw materials, resumed production, product demand and profitability increased. Additionally, as social distancing continued, demand for masks and delivery increased, leading to a rise in PP and PO consumption, according to the chemical industry. China, the largest consumer of chemical products such as ABS and PP, was also the first to recover from the COVID-19 crisis, which played a part.

In fact, the price of PP, used as a material for mask filters and packaging, recorded $946 per ton in the first week of September. This is a 26.1% increase compared to the low point in April ($750). During the same period, ABS rose 45.1% to $1,631, and HDPE increased 25.1% to $881. On the other hand, Dubai crude oil, which has a high import ratio domestically, maintained a price in the $30 range per barrel, keeping raw material cost burdens low.

A chemical industry official explained, "Although raw material prices fell due to the COVID-19 crisis, selling prices have gradually recovered, so the petrochemical industry is showing relatively solid profitability," adding, "If this market situation continues, profitability in the second half of the year is expected to improve compared to the first half."