S Korea's Kumho hopes for low Q4 feedstock costs

15 October 2008 09:42  [Source: ICIS news]

SINGAPORE (ICIS news)--South Korea’s Kumho Petrochemical Co expects prices of its main feedstocks butadiene (BD) and styrene monomer (SM) to remain weak in the fourth quarter, boosting profit margins, the company stated on its website.

BD prices would remain lower than in the third quarter due to lower utilisation rates in downstream industries, it said.

The trend might reverse if Yeochun Naphtha Cracking Center - Korea’s largest olefins complex - cut operating rates, Kumho said.

Natural rubber values may also fall temporarily, it said.

Weak demand against fresh supply from the Middle East would also affect SM prices, Kumho added.

BD is used in manufacturing synthetic rubber while SM is used as the raw material for producing styrenic resins.

Kumho is confident that the demand for SBR and BR will continue to increase in Asia, led by China and India.

Kumho had its strongest quarterly performance ever in the July-to-September period with sales rising by 78.8% to W957.5bn ($793m) and operating profits doubling to W121.9bn compared with the third quarter in 2007.

Its third-quarter operating margins rose to 12.7% from 9.5% in the same period last year.

Kumho's sales of synthetic rubber rose 22.4% to W597.1bn due to price hikes and tight supply, which offset the high BD prices. Synthetic resins sales fell by 1.6% due to lower demand.

($1 = W1,208)

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By: Pearl Bantillo
+65 6780 4359

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