Hana Securities forecast that Lotte Chemical's competitiveness will be relatively highlighted when the Trump administration enters its second term. The firm set a target price of 100,000 won and a 'neutral' investment opinion. On the 19th, Lotte Chemical's closing price was 65,100 won.
On the 20th, Yoon Jae-sung, a researcher at Hana Securities, said, “Iran's oil exports plummeted from 2.5 million b/d in 2018 to 100,000 to 200,000 b/d in 2020 due to the hardline policies of the Trump administration's first term.”
He projected, “Under the Biden administration, Iran's oil exports increased to 1.8 million b/d; however, under Trump 2.0, this will decrease again.”
This could lead to the erosion of the cost advantage enjoyed by Chinese refineries and petrochemical companies that have procured Iranian crude oil at discounted prices. Research Institute Yoon noted, “Considering the possibility of peace between Russia and Ukraine, South Korea might be able to secure Russian naphtha at over 20% cheaper than the past price of about $30 per ton, potentially easing cost procurement.”
The relative cost advantage of Chinese and Taiwanese companies that secured additional Russian naphtha will diminish. Research Institute Yoon explained, “Trump's policy to expand LNG exports may lead to rising natural gas prices in the U.S. and a weakening of ECC's competitiveness,” adding, “In fact, due to such concerns, the stock prices of U.S. ECC companies have fallen by nearly 20% since Trump's election.”
In response to Trump's tariff war, China has signaled the strongest monetary and fiscal policies in 14 years, opening up the possibility of a rebound in demand. He added, “The extremely difficult operating environment over the past 2 to 3 years has a high chance of gradually improving with the advent of Trump 2.0,” noting, “I expect a recovery in the future management environment and cash generation capability.”