SEOUL, September 09 (AJP) - Lotte Chemical, once seen as a pillar of South Korea’s industrial strength, is now grappling with a series of setbacks that mirror the broader malaise in the country’s petrochemical sector.
The company’s Malaysian unit, Lotte Chemical Titan, has recorded losses for 10 consecutive quarters, culminating in a roughly 1 trillion won ($721 million) impairment charge late last year. Once a reliable profit engine, the subsidiary has become a financial burden, forcing the parent company to shutter plants in Malaysia and seek a buyer for the struggling business.
Lotte Chemical has responded with sweeping asset sales, divesting operations from Pakistan to the United States and Japan.
Over the past two years, it has raised about 1.7 trillion won ($1.23 billion) through sales of subsidiaries and stakes in joint ventures, money earmarked for debt repayment and working capital. At home, the company is racing to reposition itself in higher-value materials, including copper foil for electric vehicle batteries, and to push into hydrogen and specialty chemicals.
The company is now focusing on portfolio advancement through expansion of hydrogen energy business and next-generation battery materials.
At a company leadership meeting in July, Lee Young-jun, who oversees Lotte’s chemical business group, urged executives to return to fundamentals. “Let’s understand our core competencies and actively seek out business opportunities based on them,” he said.
The crisis facing Lotte Chemical underscores deeper problems across South Korea’s petrochemical industry.
On Aug. 20, the government, together with relevant ministries, announced a sweeping restructuring plan aimed at cutting annual naphtha cracking capacity by as much as 3.7 million tons. Officials acknowledged that global oversupply, driven by massive capacity additions in China and the Middle East, had left Korean producers exposed.
The timing has been especially punishing for Lotte.
Its ambitious overseas investments, from Titan in Malaysia to its ethylene glycol plant in Louisiana, have struggled in the face of weak demand and depressed margins. Even as it sheds assets, the company is under pressure to accelerate its shift into higher-value sectors before its traditional petrochemical business erodes further.
Lotte Energy Materials, the company’s advanced materials arm, is at the center of that pivot.
The division has expanded sales of copper foil products for batteries and plans to begin mass production in Malaysia next year. It is also stepping up research into solid electrolytes, lithium iron phosphate cathodes and silicon anodes — technologies seen as critical to the next generation of batteries.
Whether that strategy can offset the losses mounting abroad remains uncertain.
For now, Lotte Chemical’s turnaround effort has become a test case for an entire industry under strain.
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