Lotte Chemical President & CEO Kim Gyo-hyun. (Photos: Lotte Chemical)

Lotte Chemical surpassed 1 trillion won in H1 operating profit over three years on the back of rising demand for disposable food containers and medical & hygienic items, demand for which has been bolstered by the COVID-19 pandemic.

Lotte Chemical plans to implement the “2020 hydrogen growth roadmap,” announced in July while pursuing a business portfolio shift for sustainable growth, with a focus on expanding eco-friendly items and strengthening ESG management.

In an electronic filing issued on Aug. 6, Lotte Chemical chalked up 594 billion won in Q2 operating profit on a consolidated basis, a 1,704.5 year-on-year jump.

The company saw Q2 sales and net profit surge 62.3 percent to 4,352 billion won and 1,534.1 percent to 500.9 billion won, respectively.

Lotte Chemical posted 1,217.8 billion won in H1 operating profit, topping the 1 trillion won threshold in three years since the first half of 2018.

Lotte Chemical said, “Demand for petrochemical products is on the rise overall on the back of the recovery of the global economy in the first half of this year.”

The company saw unit competitiveness improve by expanding value-added product portfolios, including for eco-friendly and hygiene items, it added.

Lotte Chemical analyzed that new plant construction and expansion will ensue in the global petrochemical industry in the second half, limiting a drop in the spread of petrochemical products.

In a conference call following the electronic filling on the Q2 business performance, Lotte Chemical said the spread of polyethylene (PE) and propylene (PP), passing through the low bottom in July, is expected to recover staring from August.

As containerships are not sufficient, the offshore markets with higher product prices have seen sales surge about 20 percent.

The company is forecast to see its profitability improve in the second half of the year on the back of the steady profitability of special PE and PP products, he said.

But mono ethylene glycol (MEG) is forecast to see its profitability weaken for the time being due to the construction and expansion of plants with a combined capacity of 18 million tons by 2025, the company said.

Lotte Chemical plans to expand its business portfolio to eco-friendly businesses other than the conventional businesses.

The company plans to pour 210 billion won to build a plant to produce electrolytic organic solvent, a major substance for producing secondary batteries, by the second half of 2023.

Lotte Chemical plans to invest 77 billion won to recycle all terephthalate (PET) products chemically by 2023. A recycled PET plant will be dedicated by the first half of 2024.

Besides, Lotte Chemical, adopting the hydrogen business as a future growth engine, plans to put into practice the 2030 hydrogen growth roadmap.

Executive Vice President Kim Yeon-sup, head of LG Chemical’s ESG Management Division, said, “At the backdrop of the fast energy paradigm shift, it is significant to secure decarbonization energy resources.”

Lotte Chemical has become the Korean industry’s first company to develop recycled polyethylene (PCRPE) to produce packing bags.

Hydrogen whose values in terms of storage and transportation are rising is recognized greatly as an industry with future growth potential in accordance with the government’s plan to nurture the industry, he said.

Lotte Chemical has already secured by-product hydrogen, and the company is able to utilize infrastructure related to ammonia, a core substance of green hydrogen, and logistics and distribution infrastructure among subsidiaries of the group.

The company is considering entering businesses: producing clean hydrogen, fuel cell and hydrogen turbine power generation.

Lotte Chemical plans to produce 160,000 tons of blue hydrogen by utilizing carbon capture and storage technologies by 2025.