LOTTE Chemical completed a petrochemical complex in Indonesia and moved to target the Southeast Asian market. LOTTE Chemical invested $3.95 billion (about 5.7 trillion won) in Indonesia. Attention is on whether this will allow LOTTE Chemical to improve its results. LOTTE Chemical has been posting continuous losses since 2022 due to a supply glut from China and a deterioration in global market conditions.
LOTTE Chemical said on the 7th that it held a completion ceremony for LOTTE Chemical Indonesia (LCI) in Cilegon, Banten Province, Indonesia, on the 6th local time. About 300 key figures and guests from both countries attended the ceremony, including LOTTE Group Chairman Shin Dong-bin, LOTTE Chemical head Lee Young-jun, Indonesian President Prabowo Subianto, and Park Su-duk, chargé d'affaires ad interim at the Embassy of Korea in Indonesia.
In his congratulatory remarks, Chairman Shin said, "This project is one of the largest investments by Korean corporations in Indonesia, symbolizing the solid partnership between the two countries and serving as an important foundation for strengthening the competitiveness of Indonesia's petrochemical industry and the nation," adding, "By producing key petrochemical products such as ethylene and propylene, it will create about $2 billion in economic added value and contribute to Indonesia's sustainable economic growth."
LOTTE Chemical planned a project to build a large petrochemical complex in Indonesia to strengthen its market dominance in Southeast Asia, which is emerging as a growth market in the petrochemical industry. The project is called "LINE," taking the first letters of LOTTE CHEMICAL INDONESIA New Ethylene Complex.
The LINE project invested a total of $3.95 billion to break ground in 2022 on a 110-hectare site (about 330,000 pyeong) and was completed in May this year. The site produces petrochemical products including 1 million tons of ethylene, 520,000 tons of propylene, 350,000 tons of polypropylene, 140,000 tons of butadiene, and 400,000 tons of BTX (benzene, toluene, xylene) annually.
LOTTE Chemical Titan Nusantara (LCTN), which produces 450,000 tons of polyethylene (PE) nearby, achieved vertical integration by sourcing ethylene from the LOTTE Chemical Indonesia plant instead of importing it as before. By switching from a sea-transport-centered ethylene supply method to pipelines connected within the complex, it can improve profitability by cutting logistics costs.
In the "Making Indonesia 4.0" roadmap being pursued by the Indonesian government, the petrochemical industry has been selected as one of the five key sectors to be fostered and is developing rapidly with an average annual growth rate in the 5% range. However, Indonesia's domestic market had a self-sufficiency rate of only 44% for ethylene last year, making it highly dependent on imports.
LOTTE Chemical said, "We plan to actively target Southeast Asia, which has high growth potential, with Indonesia as a key base, pursuing both stronger market dominance in the global petrochemical industry and diversification of our business portfolio," adding, "We will continue to rationalize the domestic petrochemical business and keep pushing our strategy to expand specialty materials such as advanced materials and fine chemicals."