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Specialty chemicals

S.Korean chem firms look to specialty chemicals to drive growth

By Jan 17, 2021 (Gmt+09:00)

S.Korean chem firms look to specialty chemicals to drive growth 

South Korea-based Kumho Petrochemical Co. stunned the market last year with a positive earnings surprise in the third quarter of 2020. The company posted an operating profit of 213.7 billion won ($194 million), almost triple the amount from the year-earlier period, thanks to the soaring sales of NB latex during the COVID-19 pandemic.

NB latex is a type of synthetic latex used to make industrial, cooking and surgical gloves. 

Kumho Petrochemical did not expect the boom to continue as overseas competitors began to aggressively expand their production. Industry watchers projected NB latex prices to plunge due to the oversupply. 

But they were wrong. The price of NB latex posted $1,822 per ton last month, up by 15% from the previous month and a staggering 92.6% increase from the same period last year.

Kumho Petrochemical is estimated to have reported an operating profit of 300 billion won in the fourth quarter of last year, an all-time high for the company, reaching close to the company's annual profit of 367.7 billion won in 2019.

“The NB latex boom may carry on for some time,” an industry official said.


Domestic chemical companies with specialty chemical portfolios are seeing their profits grow. Specialty chemicals are used to make products that offer specific functions, unlike general chemical products that are used across a wide range of areas.

NB latex is one of these specialty chemical products, and its price has stretched already this year with exports to China reaching $2,300 per ton, according to industry sources on Jan. 17.

Kumho Petrochemical's NB latex margin hit a record high, backed by flourishing sales. A domestic brokerage firm estimated the company's NB latex margin to stand at $1,256 per ton last month, more than a 60% profit margin.

"Chemical product margins are considered to be favorable if they top 10%," said an industry official. "It's the first time we've seen a chemical product with over a 50% margin."

Hyosung Group Chairman Cho Hyun-joon (center) examines spandex samples.
Hyosung Group Chairman Cho Hyun-joon (center) examines spandex samples.

The spandex industry is also flourishing. According to the textile industry, a China-based spandex factory that accounts for almost two-thirds of the country's spandex purchases recently saw its spandex supply shrink to 10 days of inventory, far below the recommended 30 days of stock. 

“Shandong Ruyi, the third largest spandex maker in China, went into default last month, which may have triggered panic buying,” said an industry source.

Meanwhile, the world’s No. 1 spandex maker Hyosung TNC Corporation has seen its earnings rise drastically. It reported 66 billion won ($60 million) in the third quarter of 2020, which is expected to have climbed to around 90 billion won in the fourth quarter. Some industry watchers expect the company to post a quarterly operating profit of over 100 billion won this year.

Other domestic specialty chemical firms, including Lotte Fine Chemical Co. and Hanwha Total Petrochemical Co., have also performed well.

Lotte Fine Chemical’s operating profit in the fourth quarter of last year climbed to 30 billion won, up 15% from the previous quarter, thanks to its cellulose business. Recently, cellulose manufacturers have posted a profit rate of around 20%.

Hanwha Total’s specialty sector has been the driving force behind the company’s improved earnings. The company, which posted an operating loss of over 200 billion won in the first half of 2020, recovered the loss in the second half of the year and turned to surplus thanks to its specialty chemical operations, including ethylene vinyl acetate (EVA), and low density polyethylene (LDPE).


In the past, specialty chemicals received little to no attention from major chemical companies given their limited market and room for product expansion.

Instead, large chemical companies focused on raising production capacity for commercial products by increasing the number of plants, alongside focusing on economies of scale.

But things have taken a turn recently as specialty chemicals prosper – positioned as future growth drivers for many chemical companies.

Debris from styrofoam buoys are a main culprit of marine garbage. 
Debris from styrofoam buoys are a main culprit of marine garbage. 

For example, Lotte Chemical Corp. recently developed expanded polypropylene (EPP), which can replace expanded polystyrene (EPS), also known as styrofoam. The newly developed product does not crumble easily, which helps prevent microplastics. The Korean government is pushing to replace styrofoam buoys with EPP to curb marine garbage.

"We will commit company resources to boost the specialty chemicals business," said a Lotte Chemical official.

The company has also developed material for antibacterial plastic. It is more expensive compared to existing plastic materials, but it has seen a rising demand since the COVID-19 outbreak. Lotte Chemical also offers post-consumer recycled polypropylene (PCR-PP), which can be used in containers for cosmetics or food. It is made by combining about 30% to 50% of recycled materials such as plastic bottles.

Write to Jae-kwang Ahn at

Danbee Lee edited this article.

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