Daiwa: LG Chem’s Q1 earnings expected to be minimally affected by Middle East conflict

Dahe Capital’s Henny Jung and Yoonki Bae stated on March 24th via Gelonghui that LG Chem’s earnings in the first quarter are expected to be only modestly affected by the conflict in the Middle East. The analysts wrote in their report that geopolitical tensions have sparked expectations of a short-term naphtha shortage, and the potential supply shortage of petrochemical products has recently pushed up the sector’s stock prices. However, they cautioned that the fundamentals of petrochemical products remain weak, with only moderate improvement anticipated in the first quarter. They pointed out that the South Korean chemical company holds about a month’s worth of naphtha inventory, and procurement difficulties could lead to decreased plant utilization in the second quarter. They warned against overly optimistic sentiment.