Amid the prolonged downturn in the petrochemical industry due to increased production from China and the global economic recession, the synthetic rubber business operated by some domestic corporations is consistently reporting profits, providing a strong support for overall performance. The technology used to produce synthetic rubber, which involves appropriately mixing raw materials to achieve specific physical properties according to customer requests, is crucial, making the market difficult for latecomers to penetrate due to the importance of long-standing cooperative relationships with customers.
According to the petrochemical industry on the 24th, Kumho Petrochemical recorded sales of 7.155 trillion won and an operating profit of 272.8 billion won last year. Sales increased by 13.2% compared to the previous year, while operating profit decreased by 24%. However, the performance of the institutional sector in synthetic rubber recorded sales of 2.7952 trillion won and an operating profit of 100.8 billion won, marking increases of 29.3% and 4.1%, respectively.
Kumho Petrochemical holds the world's largest market share (about 25%) in the field of synthetic rubber NB latex (NBL), which is used in hospitals, laboratories, automobiles, electronic products, and household goods (kitchen and sanitary gloves). Last year, the company expanded its NBL production line, increasing the maximum annual production from the previous 710,000 tons to 946,000 tons.
Kumho Petrochemical's NBL is experiencing favorable market conditions based on steady demand. The company exports 80–90% of its NBL to Malaysia, home to the world's largest glove manufacturer, Top Glove. U.S. President Donald Trump imposed a 50% tariff on medical gloves made in China starting last January and plans to raise the tariff rate to 100% next year. If Chinese gloves lose their price competitiveness in the U.S., demand for gloves produced in countries like Malaysia is expected to increase.
The synthetic rubber product for electric vehicle high-performance tires, styrene-butadiene rubber (SSBR), has also established itself as a core product line for Kumho Petrochemical. SSBR has better abrasion resistance than existing rubber products, making it suitable for electric vehicles that are about 30% heavier than internal combustion engine vehicles. The company doubled its SSBR production capacity to a total of 123,000 tons in 2022 and plans to expand it further to 158,000 tons through an additional increase of 35,000 tons in the fourth quarter of this year.
DL Chemical's synthetic rubber subsidiary Cariflex is also playing a significant role, consistently recording an operating profit margin of around 20%. Cariflex, acquired by DL Chemical in 2020 with an investment of 620 billion won, is the only company in the world producing anionic catalyst-based synthetic rubber and latex. Notably, it ranks first globally in the field of polyisoprene synthetic rubber used for surgical gloves.
Since its acquisition by DL Chemical in 2020, Cariflex has recorded sales of 1.2665 trillion won and an operating profit of 247.4 billion won over five years. The cumulative operating profit margin over five years is 19.5%, a remarkably high level in the petrochemical industry. Cariflex's products are noted for having fewer impurities and higher transparency compared to those of competitors.
A source in the petrochemical industry noted, "In the synthetic rubber market, it is crucial to mix raw materials according to the recipe requested by customers, which requires know-how derived from long experience, making it difficult for latecomers to easily enter the market, unlike general petrochemical materials."