While global oil price has been tending to rise from the expectation that the US’s oil reserve will decrease, the WTI (West Texas Intermediate) price reached a new monthly high on July 13 (local time). On that day, NYMEX closed the trade of the WTI for August 2021 at 75.25 USD per barrel, 1.15 USD higher than the day before. Also for the Brent Crude and Dubai Crude, the trade for each was closed at 76.49 USD and at 74.36 USD, respectively 1.33 USD and 0.82 USD higher than the day before.

In a report on July 13, Hwang Yu-sik, an analyst of NH Investment & Secrurities said, “Constant rising of the oil price will generate a huge amount of inventory profit for SK Innovation,” and “The company’s operating profit for Q2 this year will be about 574 billion KRW, a turnaround year-over-year.”

Analyst Hwang particularly pointed out that the oil price rise made profit from their inventory, letting them to make profits continuously in oil refinery industry and stressed that the price of Dubai Crude has risen dramatically, powered by the decision of OPEC+ countries to cut oil production continuously and the expectation of increased demand for refined oil products for the last half of this year. He added “the average oil price for Dubai Crude for Q2 2021 is 66 USD, increased of 7.1 USD from 58.9 USD in Q1 2021 and it will result in a huge amount of inventory profit.”

Also, Hwang said “As the price spread for Aromatics expanded, their business profit in chemical industry is expected around 161.4 billion KRW, increased by 43 billion KRW from the previous quarter,” explaining that the average price spread per ton of p-xylene (PX) in Q2 is 234 USD, 26% higher than Q1’s 186 USD, while that of benzene jumped 86% from 190 USD in Q1 to 353 USD in Q2.

In the same report, he said that SK Innovation announced their strategy to grow the EV battery in Story Day, adding that they are planning to invest in the EV battery as much as about total 18 trillion KRW in 5 years, expanding their production capacity to 200 GWh until 2025 and they also expanded their order backlog as much as 1 TWh, 65% higher comparing with the beginning of this year. He also said “Within this year, SK Innovation will regularize use of high-Nickel, in which the content of nickel is 90%, and the content of nickel they use for production will increase to reach 94% in 2025.

Previously, on July 1, SK Innovation held the “Story Day” at Conrad Hotel in Yeouido, Seoul, Korea, attended by Kim Jun, SK Innovation CEO, Kim Jong-hoon, Head of the directing board, and all the other board directors. There the leaders of the company announced SK Innovation’s “Financial Story,” which is about completely changing the identity of the company “from carbon to green”-based business.’

The essence of the Financial Story, according to the explanation of CEO Kim Jun and other high level leaders of SK Innovation, is that they will simply change the identity of the company from that of carbon-based industry to that of green (eco-friendly) businesses. In doing so, they simplified their strategy into three major categories: Green Anchoring – building up a green portfolio with their battery industry and other businesses such as separation membrane and recycling of used batteries; Green Transformation – converting current projects to eco-friendly business models, such as plastic recycling, etc.; and Faster fulfillment of Net Zero, which means no more emission of greenhouse gases.