Hanwha Total Petrochemical Posts Record Profits and Receives Export Milestone Award
This is a translated version of an article published by Money Today, a leading Korean daily.
Hanwha Total Petrochemical, acquired by Hanwha Group from Samsung in 2015, has recorded the highest profits in the company's history and is quickly becoming one of the Group's biggest moneymakers.
According to industry insiders, Hanwha Total Petrochemical posted cumulative profits of $927.17 million by the third quarter of this year. Already having nearly reached last year's total profits of $680.87 million by the second quarter with cumulative Q1 and Q2 profits of $670.08 million, the company broke through its previous year's performance in the third quarter.
Industry experts forecast Hanwha Total Petrochemical's total operating profits to reach between $1.111 billion to $1.197 billion this year, boosted by Hanwha Group's timely M&A.
Hanwha Total Petrochemical's excellent numbers this year is credited to the strong performance of PX (para-xylene), SM (styrene monomer) and other key products that account for around 45% of total sales. Low oil prices increased the price competitiveness of the company's CFU (condensate fractionation unit), further bolstering product margins.
PX, one of Hanwha Total Petrochemical's key products, has enjoyed a strong showing throughout the year. PX is a key raw material for PTA (purified terephthalic acid), which is used to manufacture polyester fiber, PET bottles and other products.
Fourth-quarter prospects for PX products remain bright. The PX spread, an indicator of the difference between raw materials, such as crude oil and condensate, and PX products, rose from $373 earlier this year to $364 last month, and as high as $430 this month. Prices have skyrocketed due to a fire that broke out in one of China's largest PX factories. Hanwha Total Petrochemical is the third largest producer of PX with 1.7 million tons per year in Korea.
The strong performance of SM, a raw material used for manufacturing synthetic resin products, in the first half of this year was another key factor behind the company's record-setting profits.
Inventories in China at the start of this year lagged behind that of last year, and periodic maintenance in Japan led to slight increases in January and February, and stronger growth in March and April. Slight decreases were recorded with cyclical maintenance and repair winding down in May and June, but returned to a slight increase in the third quarter despite additional capacity in China coming on line thanks to solid demand for ABS (acrylonitrile butadiene styrene), a derivative product, as well as maintenance and repair cycles in the second half of the year. Average prices for SM reached $1,008 dollars by Q3.
Hanwha Total Petrochemical will complete the expansion of its production facility for EVA (ethylene-vinyl acetate), used to manufacture photovoltaic cells, by December 2016, further increasing the ratio of high value-added products in the mix. The new addition will increase Hanwha Total Petrochemical's annual EVA production from 400,000 tons to 440,000 tons.
The Korea International Trade Association will award its "Export Award" to Hanwha Total Petrochemical next month, in recognition for the company's achievement in exceeding $5 billion in exports from July 2015 to July 2016. Hanwha Total Petrochemical's record profits as well as the award for reaching the export milestone are made more meaningful for coming only two years after the company's acquisition by Hanwha Group.
