[Alpha Biz= Paul Lee] Korea Ratings announced on December 30 that it has downgraded the outlook on SK Geocentric’s unsecured bonds from AA- “Stable” to “Negative.”

The downgrade reflects weakened profitability in SK Geocentric’s core aromatics products (benzene and PX) due to trade disputes, along with a continuing rise in financial burdens.

“SK Geocentric has been posting quarterly losses since the second half of last year,” said Kim Ho-seop, a researcher at Korea Ratings. “Cumulative operating losses for Q3 this year reached KRW 184.9 billion, compared with KRW 9.3 billion in the same period last year, marking a substantial deterioration.”

Kim noted that weakening aromatics profitability was mainly driven by lower gasoline blending demand, U.S. tariffs, and the deepening U.S.-China trade conflict. Ongoing losses in polymers (PE, PP) and declining profitability among consolidated subsidiaries also contributed to the downgrade.

Despite the completion of PX capacity expansions, cumulative supply additions over the past 4–5 years, persistently weak gasoline blending demand amid falling crude prices, slower Chinese economic growth, and global economic uncertainties are expected to keep overall earnings generation weak.

Regarding financial stability, Kim said, “The company plans to maintain investment levels within operating cash flow and to divest investment stakes and inefficient assets. However, given unfavorable market conditions, the pace of asset sales and related cash inflows is uncertain, and high financial burdens are likely to persist relative to weakened earnings.”

Korea Ratings will monitor the company’s profitability recovery through global supply-demand conditions, core product spreads, factory operation optimization, cost reductions, implementation of asset divestments, and progress in restructuring and business reorganization.

 

 

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