Lotte Chemical’s Ethylene Plants in U.S. Draws Huge Attention
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Lotte Chemical’s Ethylene Plants in U.S. Draws Huge Attention
Pres. Trump pressures foreign companies to build plants in the U.S. instead of shipping products to the U.S. in bid to cut trade deficits and employ more American workers

27(Wed), Jun, 2018

President Kim Kyo-hyun of Lotte Chem.

Lotte Chemical’s ethan cracking and ethylene glycol production plants in Lake Charles, Louisiana, have been getting a lot of attention since President Trump won the presidential election in 2016. It has became a good example of what the U.S. president wants to see from large foreign exporters to the U.S.
He wants them to set up their plants in the U.S. to slash the U.S. trade deficit and employ American workers. Pressure on foreign companies to build their plants in the U.S. has been growing since President Trump occupied the White House.
Lotte Group Chairman Shin Dong-bin attended the construction ceremony for the two petrochemical plants in June 14, 2016 to show that they represent a key part of the group’s growth engine, putting them on the same level as its retail business. The group invested $3 billion in the American facilities, and the plants are scheduled to be completed in the second half of this year.
The ethylene plant has the capacity to turn out 1 million tons of ethylene bringing in an annual revenue of $1.5 billion, while the ethylene glycol plant will produce 700,000 tons of ethanol glycol per year to be used by the textile industry.
With President Moon’s role in mediating denuclearization issues between the U.S. and North Korea getting worldwide attention, Lotte Chem’s Louisiana petrochemical plants have also been getting a large media attention because of its contribution to the U.S. economy. The plants will use shale oil produced in the U.S. as a raw material when they go on stream in the middle of this year, hiring some 2,600 American workers.
The Lotte Group decided to build the petrochemical plants in the U.S. at a cost of $3 billion under Chairman Shin’s strategy to make the petrochemical industry a key growth engine for the group.
The group’s U.S. ethan cracking project got a favorable view in 2013 when it was first hatched. Product from the U.S. will be used as a raw material instead of the expensive crude oil produced in the Middle East.
In 2014, as the project was about to get underway, the prices of oil began to fall. The price of shale oil fell so much that it was hard to say whether the oil could be used as a raw material for the Louisiana plants. Many petrochemical firms thought twice about using the Middle East crude oil as a raw material, but Chairman Shin continued to insist on using it, expecting prices will rebound. He was right.
The project benefited from higher oil prices of late as many business firms dropped their investment plans connected with using oil as a raw material, which also brought cost of industrial plant equipment and machinery down.
Lotte projects its Louisiana plants will generate more than $500 million in net profit next year, after it goes on stream in the first half. Net profit may increase as the price a shale oil goes up.
Many in the business community feel that U.S. plants run by such large Korean business groups as Samsung, LG and Lotte should be used to counter U.S. pressure to reform the FTA between Korea-U.S.
Many suggest that President Trump should be invited to the dedication ceremony for the Lotte plants in Lake Charles at the end of this year. Former President Obama was invited to the dedication ceremony for the LG plant for batteries for electric vehicles in Holland, Michigan, the U.S. in July 2010 to let the world know that LG is a leader in the batteries for electric cars. President Putin attended the ceremony for Hyundai Motor auto plant in St. Petersburg, Russia in September 2010. Lotte Group expects President Trump to attend the dedication ceremony for its Louisiana petrochemical plant this fall as it is the second largest investment made by a Korean company in the U.S. after Samsung Electronics on its chips plant in Austin, Texas.

A view of Lotte Chem’s ethylene glycol production and ethan cracking plants in Lake Charles in the State of Louisiana, the U.S.(Photos: Lotte Chem)

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