On August 17, South Korea's Korea Economic Daily, citing anonymous government officials, reported that Lotte Chemical has disclosed to creditors and the Ministry of Trade, Industry and Energy its plan to sell overseas basic chemical assets, including facilities in Malaysia, Indonesia, and the United States. The company is currently assessing market conditions and seeking potential buyers.
The sale processes for the Malaysian and Indonesian assets, previously suspended due to Middle Eastern geopolitical developments, have now been restarted. For Lotte Chemical, which has suffered years of consecutive losses and is burdened by high debt, divesting overseas assets has become a crucial means of accelerating cash repatriation and improving its financial position.
Titan's 17 Consecutive Quarters of Losses Make It the Primary Sale Target
Lotte Chemical Titan, the Malaysian subsidiary, is regarded as the key asset in this sale. Lotte Chemical acquired the company in 2010 for approximately 1.5 trillion won and currently holds a 74.7% stake.
However, operating performance has continued to deteriorate since the acquisition. Titan has now recorded losses for 17 consecutive quarters and booked around 1 trillion won in asset impairment losses in the fourth quarter of 2025. In February 2026, the company reported its largest-ever quarterly and full-year losses.
The core reason for the deteriorating profitability remains the narrowing margins on basic petrochemical products. The current spread between high-density polyethylene and naphtha has fallen below $300 per ton. Given the high cost of naphtha feedstock and persistently increasing supply in the Southeast Asian market, plant margins have come under further pressure.
Selling an asset that has been loss-making for 17 consecutive quarters is evidently challenging. Lotte Chemical previously failed twice to sell its PTA assets in Pakistan, and in 2024, its synthetic rubber joint venture in Malaysia was also liquidated. Given Titan's larger scale and more complex operations, considerable uncertainty remains regarding the final transaction price and the choice of buyer.
Indonesia LCI: Sovereign Fund Involvement, Talks Still Underway
Unlike the direct sale approach for Titan, Lotte Chemical plans to sell a partial stake to bring in Indonesia's sovereign wealth fund, Danantara.
Lotte Chemical's LCI project in Indonesia represents a total investment of about 5.7 trillion won. Its Serang integrated petrochemical complex commenced production in May 2025, featuring a mixed-feed cracker with an annual capacity of 1 million tons of ethylene and 520,000 tons of propylene, along with supporting polypropylene capacity of 250,000 tons per year.
Nevertheless, the project has remained in the red since startup. In June this year, the Indonesian subsidiary also received a $790 million loan from its parent company.
According to reports, Danantara is in negotiations to acquire a minority stake of 25% to 30% in LCI, with the transaction valued at approximately $1.7 billion. LCI is currently owned 51% by Lotte Chemical Titan, 24% by Lotte Chemical, and 25% by a Korean consortium.
During the Indonesian President's visit to South Korea in April this year, the two sides accelerated related discussions, but the talks were subsequently postponed due to Middle East tensions. No binding agreement has been signed yet, and the final stake and valuation remain undetermined.
U.S. Asset Sale Plan Continues
On the U.S. front, Lotte Chemical Louisiana produces monoethylene glycol (MEG). The plant, which started operations in 2019, has supporting capacities of 1 million tons per year of ethylene and 700,000 tons per year of MEG.
Lotte Chemical first announced the sale of a 40% stake in the subsidiary back in October 2024, with a transaction value of approximately 660 billion won. The current plan appears to be a continuation of that earlier divestment arrangement. In July this year, the plant also underwent a roughly three-week maintenance shutdown due to a critical equipment failure.
Four Consecutive Years of Losses, Net Debt Rises to 8 Trillion Won
From 2022 to 2025, the company recorded operating losses for four straight years, with cumulative losses in its basic chemicals business approaching 3 trillion won. In 2025, the operating loss reached 943.1 billion won, the highest since the company's founding, while the full-year net loss further widened to 2.4762 trillion won.
Debt pressures have also continued to mount. At the end of 2025, the company's consolidated net debt stood at approximately 6.7 trillion won, rising to 8.06 trillion won by the end of the first quarter of 2026. The ratio of net debt to total capital increased from 38% to 43%.
In June this year, a Korean rating agency downgraded Lotte Chemical's credit rating outlook from "stable" to "negative." The company issued 400 billion won in bank-guaranteed bonds in April to service debt and planned to raise another 200 billion won in July.
Over the past two years, Lotte Chemical has raised approximately 1.7 trillion won through the sale of non-core assets, but the cash flow from these divestments has still been insufficient to offset sustained operating losses and financing needs.
Lotte Chemical Overhauls Its Asset Portfolio
Lotte Chemical has previously stated its goal to significantly reduce the share of basic chemicals in its business mix by 2030, while increasing the weight of advanced materials, fine chemicals, battery materials, and hydrogen energy businesses.
However, with continued losses in the basic chemicals segment and mounting debt pressures, this transformation is no longer merely a business upgrade but an urgent asset restructuring.
Closures, mergers, and divestments are increasingly becoming Lotte Chemical's primary means of shrinking its basic chemicals operations. The restart of overseas asset sales also signals that the company is extending this wave of consolidation beyond South Korea to Southeast Asia and the United States.
Southeast Asia remains a relatively fast-growing market for global petrochemical demand, but that demand growth has not translated into profits for Lotte Chemical. In the face of competition from low-cost capacity in China and the Middle East, Titan's 17 consecutive quarters of losses already demonstrate that relying solely on regional demand growth is insufficient to turn around the profitability of high-cost petrochemical assets.
