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TOTAL’s JV to Increase Polypropylene Output in South Korea


TOTAL S.A. TOT announced that its 50/50 joint venture, Hanwha Total Petrochemical, with Hanwha will invest $500 million in Daesan integrated refining and petrochemical complex in South Korea.

The investment in this complex will increase polypropylene capacity by nearly 60% to 1.1 million tons per year by the end of 2020. Simultaneously, ethylene capacity will also increase 10% to 1.5 million tons. The increase in production volumes will allow the company to meet local demand and supply the fast-growing Asian market.

Rising Usage of Polypropylene

Polypropylene is being widely utilized in different industries across the globe, due to its lightweight nature and high performance. Per a Zion Market Research report, the Polypropylene global market is expected to improve at a 6% CAGR between 2018 and 2024. The report also indicates that the total global market of Polypropylene is expected to touch $1.61 billion in 2024, with the increasing usage of polypropylene in automotive and packaging industries.

The demand for polypropylene is also showing an improvement in the Asian countries. Hence, TOTAL’s decision to improve the production of polypropylene is a very well thought-out move by the company.

Petrochemical Strategy

TOTAL continues to focus and expand its presence in the petrochemical space. In this regard, it has launched a major project in Saudi Arabia with Saudi Aramco.

The company has decided to improve Polyethylene production capacity in the United States through its JV, Bayport Polymers, LLC. (Read more: TOTAL to Increase Polyethylene Production Capacity in US)

TOTAL’s decision to expand its petrochemical operation will help to diversify its presence in the global petrochemical market, which already has key players like Exxon Mobil Corp XOM and Royal Dutch Shell plc RDS.A.

Price Movement

Year to date, shares of the company have gained nearly 0.6% against its industry's decline of 5.7%.

Zacks Rank and A Key Pick

TOTAL currently has a Zacks Rank #3 (Hold). A better-ranked stock from the same industry is Premier Oil PLC PMOIY, carrying a Zacks Rank #2 (Buy). You can see tthe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for 2018 earnings of Premier Oil has moved up 34.5% to 39 cents in the past 60 days.

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