[Edaily Marketin KIM YEON-SEO Reporter] NICE Credit Rating has downgraded KumhoPetrochemical’s credit rating outlook from “Positive” to “Stable.” Although the company’s financial structure remains highly stable, the pace of improvement in overall profitability is slower than initially expected due to continued sluggish market conditions for nitrile butadiene latex (NB-Latex) and phenol-based products.

On the 23rd, NICE Rating announced that it would maintain KumhoPetrochemical’s unsecured corporate bond credit rating at ‘A+’ and change the rating outlook from ‘Positive’ to ‘Stable.’

KumhoPetrochemical is maintaining solid profitability in some business segments. Synthetic rubber products such as SBR (styrene-butadiene rubber) and EPDM (ethylene-propylene-diene rubber) continue to generate strong profitability, driven by Chonbang demand for tires and other applications. The combined heat and power (CHP) division is also supporting the company’s overall profit-generating capacity, backed by a stable demand base within the Yeosu Industrial Complex.

However, the recovery of the NB-Latex division is lagging. NB-Latex is a synthetic rubber raw material used in medical and industrial nitrile gloves. Amid slowing demand for gloves following the COVID-19 pandemic, coupled with the burden of capacity expansions, operating rates have remained sluggish.

Nara Credit Rating Agency (Nara Credit) projected that conditions for supply-demand improvement will gradually take shape, as new capacity expansions are expected to decrease significantly after 2025 and the closure of some low-profit facilities is scheduled. However, given the substantial accumulated idle production capacity, the agency forecast that it will take time for utilization rates and profitability to improve meaningfully, even if Chonbang glove demand recovers.

Phenol-based products manufactured by the subsidiary Kumho P&B Chemicals were also cited as a burden. Phenol-based products, such as bisphenol A (BPA), continue to face oversupply due to cumulative global capacity expansions, which is constraining a recovery in profitability.

Kim SEOYON, a senior researcher at NICE Ratings, stated, “Although the company maintains excellent financial stability, we reflected the fact that its overall profit-generating capacity has not strengthened as much as previously expected, due to the delayed recovery of the NB-Latex market—one of its key products—and the ongoing oversupply of phenol-based products at its subsidiary, Kumho P&B Chemicals.”