Lotte Chemical Corp., the chemical arm of South Korea's Lotte Group, swung to a net profit of 33.5 billion won (US$22.7 million) in the first quarter of 2025, reversing a loss of 246.3 billion won a year earlier. The turnaround was driven by improved margins from the lagging effect of feedstock costs and supply chain volatility linked to Middle East tensions, signaling potential pricing shifts for overseas buyers of basic chemicals and advanced materials.
Financial turnaround details
Operating income for January-March 2025 reached 73.5 billion won, compared with a loss of 126.6 billion won a year ago. Revenue edged up 1.8 percent to 4.99 trillion won. The company attributed the recovery to a favorable spread between raw material costs and product selling prices, which offset risks from global supply chain disruptions and rising feedstock prices.
Core business segments
Lotte Chemical produces basic materials such as polyethylene and ethylene, used in plastics and industrial chemicals for construction, automotive, and other sectors. In Q1, the basic chemicals division posted sales of 3.45 trillion won, while the advanced materials division reported 1.02 trillion won. These figures reflect steady demand for key petrochemical intermediates.
Supply-chain impact
The company noted that the lagging effect—the time gap between crude oil price changes and their impact on production costs—supported margins. This dynamic, combined with Middle East conflict-related supply chain volatility, may influence global pricing for ethylene and polyethylene derivatives. Overseas buyers should monitor feedstock cost trends and Lotte's operational adjustments.
What buyers should watch
Lotte Chemical plans to continue optimizing operations, restructuring its petrochemical business, and improving its portfolio mix to strengthen profitability. Since early 2025, the company has been restructuring its loss-making petrochemical division, including selling non-core assets to improve facility utilization. These moves could affect supply stability and pricing for importers of Lotte's products.
China sourcing context
As a major South Korean producer, Lotte Chemical's performance offers insights into regional supply dynamics. Improved margins amid Middle East tensions may lead to competitive pricing for Asian buyers, but ongoing restructuring could reduce output flexibility. Importers should assess alternative sources for polyethylene and ethylene derivatives.
Source: Read the original report | Published: May 11, 2025