Lotte Chemical Titan Malaysia has signed an agreement to sell naphtha to its affiliate, Lotte Chemical Indonesia, to mitigate Iran-related supply risks, it said in a filing to Bursa Malaysia on Monday.
Both companies are subsidiaries of Lotte Chemical Titan Holding or LCTH. The contract, valued at $25.29 million, was signed by the parties on Friday, according to the notice, which did not disclose the volume of naphtha or the duration of the agreement.
The move underscores mounting pressure facing energy producers in Asia, as tensions in the Middle East have disrupted shipments through the Strait of Hormuz, on which more than half of Asia's naphtha supply relies. Despite crackers' efforts to secure alternative spot cargoes, these remain insufficient to fully cover demand.
Lotte Chemical Corp., together with its Indonesian and Malaysian subsidiaries, issued customer letters in March flagging potential force majeure and supply volume adjustments, citing "objective difficulty" in fulfilling full contractual volumes for all customers amid the Iran crisis.
LCTH operates one of two crackers located at Pasir Gudang in Johor. The operating unit, which can produce 415,000 mt/year of ethylene and 234,000 mt/year of propylene, reduced runs from 90% to 70% in March since the U.S.-Israel strikes against Iran began on Feb. 28.
Primarily fed on naphtha, Lotte Chemical Indonesia's flexible steam cracker has a nominal capacity of 1 million mt/year of ethylene and 520,000 mt/year of propylene in Merak.
Lotte Chemical Indonesia is a joint venture with 51% ownership by LCTH. Five South Korean financial institutions hold 25%, while Lotte Chemical Corp. holds the remaining 24%.
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--Reporting by Yiwen Ju, yju@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com
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April 21, 2026 06:40 ET (10:40 GMT)
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