Karachi: Lotte Chemical Pakistan Limited has reported a significant drop in revenue for the first quarter ending March 31, 2025, according to its un-audited condensed interim financial information. The company attributed the decline to a lower sales volume, compounded by rising operational costs.
For the first quarter of 2025, crude oil prices, specifically West Texas Intermediate (WTI), experienced a downward trend, averaging $71.15 per barrel. This represented a modest increase of 1.1% from the previous quarter, despite initial strength due to winter heating demand and positive economic indicators from the West. However, the market faced a glut, fueled by potential production increases from OPEC+ and steady supplies due to a Middle East ceasefire. Additional downward pressure came from uncertainties in U.S. trade policies and persistent inflation.
Paraxylene (PX) prices deviated from the upstream energy market at the quarter's onset, driven by unplanned outages and scheduled maintenance that constrained supply. Despite stable downstream demand post-Lunar New Year, PX prices eventually dropped, with margins over Naphtha averaging $201.79 per metric tonne. The average PX price for the quarter was $859.66 per tonne.
PTA prices mirrored the PX market, with restocking activities post-Lunar New Year tightening availability. Despite this, competitive supplier offers and added capacity capped price gains, with margins averaging $75 per metric tonne, a 2.6% decrease from the prior quarter. The quarter's average PTA price stood at $642.75 per metric tonne.
According to information available from the Pakistan Stock Exchange (PSX), the domestic polyester industry operated at 75% capacity during Q1 2025, an improvement from the previous quarter. Demand from the Textile and PET sectors rose ahead of Ramadan, though high inflation and cheaper imports via the EFS scheme dampened actual demand.
Operationally, Lotte Chemical's production volume reached 115,996 tonnes, marking an 8% increase from the same period last year. However, sales volume, confined to domestic sales, fell by 22% to 99,671 tonnes, due to competition from cheaper imports. The company also suspended plant operations from March 28 to April 17, 2025, to manage inventory efficiently.
Financially, the company reported a 33% revenue decline compared to the previous year, primarily due to reduced sales volume. The gross profit for the quarter dropped to Rs 1,332 million, down from Rs 1,684 million the previous year, amid higher sales costs driven by increased gas prices. Administrative and general expenses rose by 11% due to inflation. Earnings per share for the quarter decreased to Rs 0.44, compared to Rs 0.59 in Q1 2024.
Looking ahead, crude oil prices are projected to remain under pressure from reciprocal U.S. tariffs and the anticipated unwinding of OPEC+ production cuts. Geopolitical uncertainties and a sluggish recovery in China's industrial activity may further suppress global demand.
Paraxylene prices are expected to align with energy market trends, potentially supported by supply constraints from ongoing unit turnarounds. Conversely, PTA prices may face pressure from high operating rates and new capacity additions, despite seasonal downstream demand.
Domestically, the polyester industry anticipates robust demand during the peak summer season but faces challenges from rising energy costs and cheap imports. Global market volatility, spurred by U.S. tariff policies, could also impact the market's stability.