“We see Lotte as another beneficiary since its purified terephthalic acid (PTA) is likely to be consumed by PSF manufacturers,” said Faisal Shaji, Head of Research at Standard Capital Securities. Lotte, formerly known as Pakistan PTA, is the country’s largest producer of purified terephthalic acid (PTA), an organic petrochemical that is used as an ingredient in the manufacture of plastics, specifically polyethylene terephthalate (PET), the material used to make plastic soft drink bottles.
However, it can also be used as a raw material in the production of power loom synthetic fabric (PSF). Given the destruction of as much as 10 per cent of the country’s cotton crop combined with rising global prices of the commodity, PTA looks like a viable option for textile manufacturers.
Lotte Pakistan PTA is expected to be one of the few beneficiaries of the largest floods to hit in the last 80 years.
The cement sector is expected to be another beneficiary from the reconstruction efforts that are expected to follow.
Analysts, however, have been scathing in their criticism of the government’s handling of the crisis, blaming them for an aimless approach to crisis management which is likely to translate into a range-bound stock market.
“A directionless economy will yield directionless stock markets,” commented Shaji.
He added that the energy sector, particularly, would be badly hit as the flood will further distract the government from its ability to resolve the chronic problem of inter-corporate circular debt that has brought the energy chain to a virtual standstill.
Lotte Pakistan PTA profit surged 80 per cent to Rs2.18 billion for the first half of the current year on the back of higher PTA prices.
Published in The Express Tribune, September 1st, 2010.
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