Lionchemtech "Leap Forward as a Specialized Chemical Materials Company"

[Asia Economy Reporter Hyunseok Yoo] "We will break away from the image of a building materials company and develop new natural waxes to leap forward as a specialized chemical materials company."

Park Sang-won, Executive Director, whom we met at the Lionchemtech headquarters located in Daedeok-gu, Daejeon Metropolitan City, revealed this goal.

Founded in 1982, Lionchemtech is a specialized company that manufactures synthetic waxes added during the processing of chemical products such as artificial marble used for interior and exterior building materials, plastics, fibers, and rubber. It ranks third in domestic market share in the artificial marble sector. After meeting Executive Director Park at the Daejeon headquarters, we visited the factory to observe the process of making artificial marble. The factory located in Munpyeong-dong produces artificial marble, while the one in Pyeongchon-dong manufactures synthetic wax.

Artificial marble is made by mixing chemical substances. Chemicals are mixed in a certain ratio to form a semi-liquid state and then injected. After the chemical reaction hardens the product, it is cut to size, the surface is smoothly polished, and then packaged. This completes the marble we commonly know.

On the artificial marble production line, products were being continuously made. The products were being injected nonstop, and the cutting machines were running without pause. Until the first half of this year, Lionchemtech went through a difficult period due to the impact of the novel coronavirus disease (COVID-19) on its performance.

In the first half, sales reached 66.4 billion KRW with an operating profit of 6.5 billion KRW. Sales decreased by 9.7% compared to the same period last year. However, operating profit increased by 18% due to a drop in raw material prices caused by falling oil prices, which improved the operating profit margin.

The company explained that from the second half, factory operating rates have been recovering to normal levels. Performance is improving. He said, "40% of total export volume occurs in Europe, which was hit by COVID-19," but added, "Since September, recovery has been underway, and now production is running at full capacity without breaks."

Lionchemtech expects continuous growth in the artificial marble market. Products that were once used in high-end apartments or facilities are now being used more widely in general apartments and commercial buildings. In particular, there is high expectation for engineered stone (E-stone), which has surface strength and scratch resistance superior to conventional artificial marble and is closer to natural stone. Executive Director Park emphasized, "E-stone was mainly used in luxury buildings but is now expanding into general officetels and other areas, growing the market. Since this sector is relatively small, we have a significant advantage over large corporations."

The synthetic wax sector is also a business expected to grow again. Synthetic wax is not a polish but a precision chemical product material used in various products such as semiconductors and plastics. It is also the original business started during the era of Saehan Chemical Industry, the predecessor of Lionchemtech. Although the company's main focus shifted after adding artificial marble to its business, it is fundamentally a chemical company. In the first half of this year, artificial marble accounted for 76.37% of total sales, and synthetic wax 20.77%.

In 2081, Lionchemtech developed eco-friendly adhesive materials in collaboration with SK General Chemical. The production method involves receiving raw material POE (Polyolefin Elastomer) from SK General Chemical and blending additives such as wax. These products are mainly sold in the European market. The eco-friendly adhesive is odorless and non-toxic, used in food and food packaging, and sanitary nonwoven fabrics. Especially with increased deliveries due to COVID-19, demand for adhesives has also risen. In the second quarter, sales volume of eco-friendly adhesive materials was 641 tons (t), a 13.5% increase compared to the same period last year. He emphasized, "This product is the second developed worldwide," and added, "The wax sector has continued to grow even amid the COVID-19 situation."

Lionchemtech is preparing various products, including eco-friendly wax materials used in automobiles. Especially as the application fields of wax are expanding, explosive growth is expected. He said, "Explosive growth of existing products is expected next year or the year after," and added, "Since we are developing various other products, we will grow into a comprehensive chemical materials company rather than a building materials company in the future."