[Click eStock] "Lotte Chemical Aims for Growth by Entering Hydrogen Business"

3 Trillion KRW Sales Target by 2030

[Asia Economy Reporter Minwoo Lee] Lotte Chemical has chosen the hydrogen business as its growth strategy, setting a domestic market share target of 30%. However, concerns remain as performance is expected to fully materialize starting in 2025.

On the 20th, Shinhan Financial Investment maintained its "Buy" rating on Lotte Chemical but lowered the target price by about 15.6% to 380,000 KRW. The closing price the previous day was 236,000 KRW.

The decision to focus on the hydrogen business as a future growth engine was analyzed as reasonable. The chemical industry accounts for 15% of global carbon dioxide emissions, and with the global carbon neutrality trend, various regulations are expected, making a shift to eco-friendly practices inevitable. Jinmyung Lee, a senior researcher at Shinhan Financial Investment, explained, "Last month, Lotte Chemical announced a growth strategy to invest 4.4 trillion KRW in the hydrogen business by 2030, aiming for sales of 3 trillion KRW. Although the sales target may seem low compared to the investment, it is fully justified as a proactive investment in a high-growth sector."

Lotte Chemical aims to secure a 30% domestic market share across all areas from production to distribution and utilization by 2030. It is expected to produce 600,000 tons of hydrogen (160,000 tons of blue hydrogen and 440,000 tons of green hydrogen) by 2030, achieving sales of 1.2 trillion KRW. In the core area of blue hydrogen, carbon capture, utilization, and storage (CCUS), Lotte Chemical plans to establish demonstration facilities with Air Liquide (which holds gas separation membrane technology) and commercialize them next year. For green hydrogen production, the company will adopt the ammonia method and collaborate with its affiliate, which holds 70% of the domestic ammonia market. Additionally, it has plans to rapidly secure economic feasibility through over 2 trillion KRW in overseas green hydrogen-related investments to import hydrogen.

In the distribution sector, through a joint venture (JV) with Air Liquide and SK Gas, it is expected to install 200 liquid hydrogen charging stations by 2030. In utilization, hydrogen power generation (fuel cells/gas turbines) of 370 megawatts (MW) is projected to generate sales of 1.2 trillion KRW by 2030.

Senior researcher Lee noted, "There are concerns such as the hydrogen business performance becoming full-scale only from 2025. However, through infrastructure utilization like Lotte Fine Chemical and various collaborations with Air Liquide and SK Gas, Lotte Chemical is expected to quickly capture the market compared to other companies."