South Korea’s liquefied petroleum gas (LPG) industry is showing signs of recovery led by increased demand for petrochemical manufacturing, raising hopes that it could snap out of a lengthy lethargy of the last five years.

The nation’s leading LPG importer SK Gas Co. reported handsome earnings for the second quarter ended June on Friday, helping to boost its overall earnings in the first six months of this year. According to the company, it raked in 46.6 billion won ($42.5 million) in operating profit on sales of 1.3 trillion won for the April - June period on a consolidated basis. For the first half, its operating profit skyrocketed 182 percent and sales jumped 31 percent year over year.

Another top LPG provider E1 Corp. that is about to announce its second-quarter earnings Tuesday is also expected to report big gains. For the first quarter ended March, it reported an 87 percent on-year gain in operating profit despite a 12 percent drop in sales.

The lucrative first half for the two LPG suppliers indicates the county’s LPG sector in on track for recovery after suffering from constant losses since 2011 on sluggish demand. SK Gas saw its operating profit plunge 42 percent to 93.5 billion won last year from 163.4 billion won in 2011, while E1’s operating income plummeted 74 percent from 137.6 billion won in 2011 to 35.6 billion won last year.

However, entering this year, demand for LPG in the petrochemical industry has rapidly grown with many petrochemical choosing LPG over naphtha as their feedstock. SK Gas also upped its own consumption by building its factories. LPG demand that was on a downward spiral of annual 3 percent on average started to pick up this year, rising more than 20 percent on year for the first six months this year. LPG use for petrochemical products reached 1.29 million metric tons in the first half of this year, more than doubling from 600,000 metric tons from a year ago.

By Jung Wook

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]