LG Chem, which yielded the No. 1 position to Lotte Chemical last year, is forecast to regain the top spot almost one year later. Lotte Chemical, which has adopted an all-in policy on petrochemicals, had seen market conditions slump, while on the other hand, LG Chem eliminated slack through the diversifyication of its business portfolio, business sources said. 

A report released by the securities information company Fn Guide showed that LG Chem saw an operating profit in the second quarter stand at an estimated 677.9 billion won, up 10.7 percent over the same period of 2016, while Lotte Chemical’s operating profit was estimated at 648.4 billion won, up 6.6 percent. Lotte Chemical rose to the No. 1 position, outrunning LG Chemical last year for the first time since its establishment 40 years ago. Entering the first quarter of the year, Lotte Chemical chalked up 814.8 billion won in operating profit, overtaking LG Chem, which posted 796.9 billion won in the same period. LG Chem’s “reversal” in the second quarter of the year is owed to Lotte Chemical’s products affected by crude oil fluctuations. The reason is that the price gap between naphtha, the raw material for petrochemical products, and ethylene, made with naphtha, narrowed from $783 in February 2017 to $525 in June 2017. 

Lotte Chemical has seen the portion of synthetic resins made with ethylene stand at 70 percent. On the other hand, LG Chem’s corresponding figure is 40 percent. LG Chem and Lotte Chemical have adopted different long-term strategies. 

Lotte Chemical has been expanding naphtha cracking centers to produce more general use products with the goal of achieving economies of scale. The company wants to reinvest the money it earned in high season into the petrochemical sector to make more money in another boom season. However, LG Chem is diversifying its business portfolio, departing from a focus on the petrochemical sector. 

LG Chem Vice Chairman Park Jin-soo said in early this year that “The price gap between naphtha and ethylene is abnormally high.” He stressed the need for the improving of fundamentals through diversification in boom times. It is the reason the company has focused on future growth engines, including EV batteries, information electronics materials, and bio sectors. 

LG Chem has seen its non-chemical businesses improve little by a little. The battery business division is predicted to see its losses decline 10.4 billion won in the first quarter of the year to between 1 billion and 4 billion won in the second quarter.  

LG Chem Aims to be ‘Top 5’ Global Chemical Company 

LG Chem is concentrating its capabilities on nurturing core businesses, including basic materials, batteries, IT/electronics materials and life science. The company aims at becoming a “global top five” chemical company by advancing its business portfolio.

The Basic Materials & Chemicals Business Division targets raising annual production capacity of elastomer, a value-added synthetic resin, to 290,000 tons. LG Chem has secured a proprietary metallocene catalyst and process technology. The company is rated as having global top-class product competitiveness by establishing a vertical integration regime ranging from basic materials to catalyst and finished products. 

The battery business division plans to maintain a competitive edge in terms of price, function and safety by focusing on R&D. The vision has a strategy to retain the No. 1 position in a race to win a project to produce a G3 electric car that can drive 500 km per charge. 

In an effort to solidify the No. 1 position in the global polarizer market, LG Chem plans to increase production in China, which grows with an annual average growth rate of more than 30 percent. Ever since LG Chem became the first company to commercialize LCD polarizers in 2000, the business division has steadily grown through aggressive investment in R&D and the development of differentiated products. As a leading global company in the polarizer market, LG Chem has also been strengthening global competitiveness in the areas of ITO Film, touch panels and circuit board materials.

The Life Sciences Business Division plans to nurture Zemiglo, Korea’s first new drug to treat diabetes, into a leading product. The division plans to accelerate efforts to develop new drugs to become the nation’s leader in the metabolic disorder and bio medicine segments. It also wants to explore overseas markets. It plans to advance the release of such drugs as diplococcus pneumoniae and LDVD, a mixed vaccine for the prevention of diphtheria, tetanus, pertussis, hepatitis B, Haemophilus Influenzae type b (Hib), and poliomyelitis by conducting their clinical tests in Korea and abroad.