Lotte Chemical Corp is considering divesting part of its assets in Indonesia, including a possible sale of shares in PT Lotte Chemical Indonesia (LCI) to BPI Danantara, as part of a broader petrochemical business restructuring plan (19/08).

The South Korean chemical company is preparing to divest selected basic chemical assets in Malaysia, Indonesia and the United States amid continued pressure from excess petrochemical supply from China, which has weighed on industry profitability.

Lotte Chemical has presented plans to reorganize several basic chemical businesses to creditors and relevant authorities, according to Korea Economic Daily.

The company is now exploring the market, including potential investors or buyers and possible transaction structures.

The restructuring is aimed at reducing Lotte Chemical's exposure to low-profitability petrochemical businesses and shifting its portfolio toward specialty chemicals with higher added value.

Lotte Chemical Considers Selling Indonesia Stake to Danantara

In Indonesia, Lotte Chemical is considering divesting part of its ownership in PT Lotte Chemical Indonesia (LCI).

The company is reportedly discussing the possibility of selling part of its LCI shares to BPI Danantara, Indonesia's sovereign wealth fund.

Lotte Chemical has invested about KRW5.7 trillion to develop its petrochemical facilities in Indonesia.

Discussions with Danantara reportedly became more intensive after President Prabowo Subianto's state visit to South Korea in April 2026.

However, the negotiations were also delayed by developments in the conflict in the Middle East.

The plan is part of Lotte Chemical's broader restructuring, which now includes overseas assets considered to have limited contributions to the group's profitability.

LC Titan Becomes a Key Divestment Target

Another major asset included in the restructuring is Lotte Chemical Titan International Sdn. Bhd. (LC Titan), a Malaysia-based petrochemical company.

Lotte Chemical acquired LC Titan in 2010 for about KRW1.5 trillion. The company currently owns 74.7% of the Malaysia-listed company.

Lotte Chemical has attempted to divest LC Titan since early 2024. The process was stopped after the company failed to find a suitable buyer.

The company resumed discussions with several private equity (PE) firms in early 2026. However, negotiations were reportedly delayed again because of increased geopolitical uncertainty caused by conflicts in the Middle East.

LC Titan's market capitalization has also declined significantly. It reached about KRW4 trillion in 2018 but has since fallen to approximately KRW250 billion.

Under the latest option, Lotte Chemical is considering selling LC Titan's production facilities in Malaysia through an asset transfer rather than selling its controlling stake. The transaction value under consideration is up to about KRW700 billion.

Lotte Chemical Restructures Petrochemical Capacity in South Korea

The overseas divestment plan follows Lotte Chemical's restructuring efforts in South Korea, which began in early 2025.

In Daesan, Lotte Chemical is working with HD Hyundai Oilbank to integrate naphtha cracker (NCC) facilities. In Yeosu, the company is collaborating with Yeocheon NCC, which is owned by Hanwha Solutions and DL Chemical.

The two projects will reduce the total ethylene production capacity involving Lotte Chemical by 2.49 million tons.

The restructuring comes as China's increased production capacity has created a significant imbalance between petrochemical supply and demand.

Basic chemicals still account for around 70% of Lotte Chemical's total revenue. The company's dependence on commodity petrochemical products makes its performance sensitive to industry cycles, oversupply and declining margins.

By divesting low-profitability assets and integrating some production facilities through joint ventures, Lotte Chemical plans to improve its cost structure and financial position.

The transfer of the Daesan and Yeosu facilities to joint ventures could also shift part of Lotte Chemical's debt burden to those entities.

Businesses that previously affected performance through losses could also be removed from the company's consolidated income statement and subsequently accounted for using the equity method.

The restructuring is estimated by industry players to reduce Lotte Chemical's net debt from around KRW8 trillion to approximately KRW5 trillion.

PHOTO: LOTTE CHEMICAL

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