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LOTCHEM likely to install new plant of 850 kT

November 12, 2021 (MLN): Lotte Chemical Pakistan Limited (LOTCHEM), the sole producer of PTA in Pakistan, is likely to install a new plant of 850 kT capacity with higher efficiency, taking the total capacity to 1,350 kT, the company’s management said during a corporate briefing session held yesterday.

While commenting on expansion plans, the management said that expansion in the company’s PTA capacity relies heavily on domestic downstream expansion and long-term government assurance on duty protection. “Once downstream expansion plans are set in motion, the Company is expected to install a new plant of 850kT capacity” management informed.

At present, the domestic PTA demand stands at around 750 KT/annum, whereas LOTCHEM produces 500 KT/annum and the rest of the demand is fulfilled through imports. The Company plans to exceed the 500kT capacity to 515kT – 520kT during CY21 by improving operational efficiency.

The new plant is expected to cost $400 – 450 million and is expected to take nearly 2 years to complete. However, with the current demand of 750 kT in Pakistan and high operational costs associated with exports, the new plant is not currently feasible, the management said.

On the production side, during 9MFY21, LOTCHEM’s production surged by 36% to 384K tons compared to 295K tons during SPLY. The jump in production was attributed to COVID-19 last year. Management further informed that currently, the plant is running at its full capacity.

Sharing latest financial performance, the company reported a profit after tax of Rs3.2bn, up by 2.7x YoY during. Net sales of the company increased due to demand recovery post-COVID peak and 44% higher PTA prices during 9MCY21 compared to the corresponding period last year. However, PTA-PX margins have been impacted due to higher acetic acid cost of $967/MT, compared to $371/MT), which makes up nearly 4% of the raw material input, the management said.

With regards to the gas price hike, the management believes that it will not be applicable for the textile industry and since LOTCHEM also falls under the zero-rated regime, therefore, expects the same treatment.

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Posted on: 2021-11-12T13:29:04+05:00

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