Malaysia’s Lotte Titan plans to cut operating rates on squeezed margins

According to market sources, Lotte Chemical Titan is mulling over cutting operating rates at one of its naphtha crackers in Pasir Gudang, Johor starting 14 March 2022 for about two weeks as surging naphtha costs eat into profit margins. 

The producer might lower the operating rate by 10-20% at the No. 1 naphtha cracker with an annual output of 430,000 tons/year of ethylene and 150,000 tons/year of propylene. 

In mid-February, Lotte Titan has already shut its Fluidised Naphtha Cracker (FNC) at the same location for two-month maintenance. The FNC is the smallest cracker, producing 93,000 tons/year of ethylene and 127,000 tons/year of propylene. 

As a result, the downstream PP and PE units are expected to reduce operating rates. These include three PP lines with a combined output of 640,000 tons/year, two HDPE lines with outputs of 335,000 tons/year, and an LDPE line capacity of 230,000 tons/year. 

The reduce operating rates at the No. 1 naphtha cracker could also impact the operating rates at Lotte’s plants in Indonesia. 

Naphtha costs in Asia rose more than 60% since late December 2021 and most of the gains are in recent days following the surge in crude oil prices, which pressure naphtha cracking operators across the region. A key Thailand producer is also planning to cut production rates.