Lotte Chemical Launches Commercial Operation of Indonesian Olefin Complex with Annual Ethylene Production of 1 Million Tons

Lotte Chemical's Malaysian subsidiary, Lotte Chemical Titan, recently announced that its steam cracking plant and derivatives complex in Merak, Cilegon, Indonesia, with an investment of $3.95 billion, has commenced commercial operations.

The project, named "Lotte Chemical Indonesia New Ethylene (LINE) Project" (LINE), is being developed by PT Lotte Chemical Indonesia, a subsidiary of Lotte Chemical Titan. In an announcement submitted to the Malaysian Stock Exchange on October 15, Lotte Chemical stated that the project successfully commenced commercial operations on October 15, 2025.

The annual rated capacity of this integrated petrochemical facility is: 1 million tons of ethylene, 520,000 tons of propylene, and 140,000 tons of butadiene.

The current Asian olefin market is in a state of oversupply, primarily due to a recent wave of new capacity coming online, coupled with weak demand for key derivatives against the backdrop of a bleak economic outlook.

The LINE project is a joint venture established by Lotte Chemical Titan, its parent company Lotte Chemical Corporation, and other affiliated companies of the Lotte Group.

In August of this year, Lotte Chemical Indonesia's polypropylene (PP) plant in Cilegon, with an annual production capacity of 250,000 tons, achieved standard production.

According to Platts on August 14, the naphtha cracking unit of the project has been operating smoothly since May this year, achieving standard production of ethylene, propylene, and butadiene. Lotte Chemical Indonesia currently operates two polypropylene plants with a combined annual capacity of over 390,000 tons.

The supply of petrochemical products exceeds demand.

On August 6, Lotte Chemical Titan announced that its net loss for the second quarter narrowed to 173 million Malaysian Ringgit (approximately 40.8 million US dollars), compared to a net loss of 248.8 million Malaysian Ringgit in the same period last year.

The narrowing of losses was mainly attributed to the improvement in profit margins, but the company stated in its outlook at the time that the global and regional oversupply of petrochemical products continues to disrupt the supply-demand balance.

In May this year, Lotte Chemical Titan announced that it had signed a three-year naphtha procurement contract with Saudi Aramco's affiliate, Saudi Aramco Trading Singapore Pte. Ltd. The contract period is from July 2025 to June 2028, during which Saudi Aramco will supply approximately 300,000 to 400,000 tons of naphtha annually according to the agreement.

In August, Lotte Chemical Indonesia signed a 10-year sales agreement with PT Lotte Chemical Titan Nusantara, under which the latter will supply approximately 350,000 tons of ethylene annually, with a total contract value of 2.9 billion USD.

On October 22, Platts Energy Information assessed that the CFR Northeast Asia landing price of ethylene remained stable day-on-day at $780 per ton, consistent with the trading price level on that day. The CFR Southeast Asia landing price of ethylene also remained stable day-on-day at $770 per ton, following the trend of the neighboring Northeast Asia market.

According to Platts data, the ethylene-naphtha spread assessed on October 21 was $240 per ton, which is below the typical spread level of $250 per ton for integrated producers and also below the typical spread level of $300-350 per ton for non-integrated producers.