Petchem earnings take massive hit amid weaker margins in Q4
LG and Lotte swing to net losses
Asian producers LG Chem and Lotte Chemical Titan both swung to a net loss during the final quarter of 2022. LG Chem’s net loss was 6 billion won ($4.8 million), largely due to lower output, a nationwide truckers’ strike and weaker demand from China. Lotte Chemical Titan posted a net loss of RM317.2 million ($74 million) in the fourth quarter, weighed by weakened demand.
Weaker economy, slower demand take toll on US producers
The US producers also suffered significant financial losses during the fourth quarter. Dow’s net sales were $11.9 billion, down 17% versus the year-ago period and 16% quarterly, reflecting slower GDP growth and customer destocking.
ExxonMobil’s chemical earnings were $300 million compared to $800 million in the third quarter amid weaker margins stemming from continued supply additions and softening demand in North America and Europe.
Phillips 66’s chemicals segment, which reflects equity investment in CPChem, reported $52 million in income. This was a massive drop from $135 million reported during the third quarter of 2022. The company attributed the slump to lower margins and volumes.
OMV’s profit plummets amid lower contribution from Borouge
Austrian OMV AG reported a 43% fall in their fourth quarter net profit of €308 million ($335 million). The producer also reported that their polyolefin sales volumes lessened to 1.42 million tons. The contribution from the Borealis joint ventures declined by 86%.
OMV stated that a softening market environment led to a lower contribution from Baystar and Borouge, adding that the Baystar ethane cracker saw operational challenges during the start-up and also experienced a shutdown caused by the hard freeze in December.
Borouge’s stand-alone net profit dropped by 17% year-on-year to $247 million. Borouge’s PE sales volumes remained at the previous year’s level, while PP sales volumes increased by 19% thanks to the ramp-up of the new PP unit.
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