[Featured Stock] Taekyung Chemical, Worst Carbon Shortage 'Price Is What You Ask'... Stable Supply Is the Greatest Strength

[Asia Economy Reporter Hyungsoo Park] Taekyung Chemical is showing strong performance. Amid continued high oil prices and global supply chain crises, news of a shortage in carbon dioxide supply causing carbon dioxide prices to soar appears to be influencing the stock price.

As of 9:36 AM on the 16th, Taekyung Chemical is trading at 19,550 KRW, up 15.0% compared to the previous trading day.

The Korea High-Pressure Gas Industry Cooperative Federation announced on the 12th that following the carbon dioxide shortage caused by COVID-19, domestic carbon dioxide manufacturers are facing production disruptions due to plant maintenance by petrochemical companies. The federation estimates the current domestic carbon dioxide production capacity at 83,000 tons per month and predicts production of 24,470 tons in May, a 70% decrease, and 15,430 tons in June, an 80% decrease. Carbon dioxide prices have also surged significantly, having more than doubled over the past two years.

The semiconductor industry expressed concerns that if the carbon dioxide supply shortage continues, some production disruptions may occur. High-purity carbon dioxide used in semiconductor processes is utilized in the cleaning process to wash away debris generated while etching wafers. The shipbuilding industry, which uses carbon dioxide as a welding gas, faces a similar situation. In 2008, there was also a disruption in operations due to a shortage of welding carbon dioxide gas. As the global shipbuilding market enters another supercycle, welding demand is rising again, making stable carbon dioxide procurement a critical issue.

Carbon dioxide gas is mainly produced as a byproduct during the manufacturing of petroleum and petrochemical products. It is also generated in fertilizer and alcohol plants. This is called 'raw material carbon dioxide.' Raw material carbon dioxide contains many impurities.

Meanwhile, with summer approaching, the demand for dry ice used in frozen and refrigerated foods is explosively increasing, causing a shortage of raw material carbon dioxide available for liquefied or compressed carbon dioxide, further exacerbating supply instability. Taekyung Chemical, a listed company, announced on the 29th of last month that it signed a dry ice supply contract worth approximately 8.9 billion KRW over two years with SSG.com.

Carbon dioxide maker companies receive raw material carbon dioxide, refine it, and sell liquefied carbon dioxide to small and medium-sized filling companies. Carbon dioxide makers also sell carbon dioxide directly to large-scale distributors or manufacture and supply dry ice. The structure flows from petroleum companies (raw material carbon dioxide) → carbon dioxide makers (liquefied carbon dioxide) → small and medium filling companies (liquid and gas) → small and medium manufacturers and dealerships domestically. Domestic carbon dioxide makers include Taekyung Chemical, Seondo Chemical, Changshin Chemical, Dongkwang Chemical, SK Materials Rewtec, and Hanyu Chemical.

Compared to competitors operating a single plant with a single raw material supply source, Taekyung Chemical operates multiple plants with multiple raw material supply sources. It has secured a foundation for stable supply. Due to entry barriers such as securing raw material sources, only a few companies including Taekyung Chemical participate, and the main competitive factors in the market are securing stable supply capacity and price.