This article first appeared in The Edge Malaysia Weekly on May 3, 2021 - May 9, 2021

SOUTH Korean Park Hyun Chul has been at the helm of Lotte Chemical Titan Holding Bhd (LCT) for four months after succeeding Lee Dong Woo, who resigned following the change in board representation at Lotte Chemical Corp (LCC) — the parent of LCT.

Park brings with him more than 29 years of experience in production, cracker operations, project development and management in the petrochemical industry. He says that as president and CEO of LCT, his top priorities are sustaining its business growth and achieving its aspiration of becoming a top-tier petrochemical company in Southeast Asia.

To achieve these goals, Park has set his sights on the group’s planned RM18 billion Lotte Chemical Indonesia New Ethylene (LINE) project in Indonesia, which will double its existing production capacity. Its completion will help propel LCT into the top three companies in Southeast Asia, with the other two being Thailand-based Siam Cement Group pcl and PTT Global Chemical pcl.

The proposed project is also expected to place LCT a notch above Petronas Chemicals Group Bhd’s Refinery and Petrochemical Integrated Development (RAPID) in Pengerang, Johor, in terms of capacity.

According to Park, the original plan was to commence construction at the end of last year or early 2021, but this has been disrupted by the Covid-19 pandemic. Nevertheless, the land for the LINE project has been acquired and the company is currently undertaking a strategic review of the timing and progress of the construction. LCT owns 51% of the project while LCC holds the remaining 49%.

Park says construction of the multibillion-ringgit project is likely to kick off some time this year, in time for the group to take advantage of the next up cycle in the petrochemical industry. “Strategically for project planning, we aim to time the overall project completion to ride the next petrochemical cycle uptrend in order to maximise our return on investment,” he tells The Edge.

“Before Covid-19, petrochemical industry research and data providers such as ICIS had forecast an industry recovery and uptrend in 2022/23. With the pandemic impact in 2020/21, the cycle is reasonably expected to be pushed back by one to two years.”

Still, it remains to be seen whether the market environment will remain conducive for LCT as such major projects have a long gestation period. Industry observers say the quantum of positive impact hinges on market conditions over the next few years.

“In general, it will add more value to its Indonesian operations. But how much profit you can get will depend on the market situation then. So, we don’t know how positive the expansion plan is,” an analyst opines.

A fund manager concurs, saying that the project will be “long-term positive”, but with “short-term uncertainty”. “Expansion is always good for the company, but earnings contribution in the short term is not confirmed yet,” he adds.

Going forward, LCT’s sustainable growth strategy remains focused on three pillars: plant operations optimisation, business competitiveness, and sustainability and governance to achieve its vision.

“Since LCC took over this company [LCT] in 2010, we have put in place many plant enhancements, upgrades and maintenance programmes. Our plants in Johor are well maintained and running smoothly. This will put us in good stead to optimise production to meet market demand, especially when ASPs (average selling prices) are on an uptrend,” says Park.

“There will be a scheduled statutory turnaround for two of our plants in Malaysia [Cracker Plant 1 and Polyethylene Plant 1] in FY2021, with a budgeted turnaround capex of about RM160 million,” he says.

He adds that LCT is committed to environmental, social and governance efforts in running its operations safely and in compliance with regulations and international standards. Going forward, it will explore recycling and waste management initiatives while ensuring its employees are happy working with the group.

“We will continue to enhance our business with new value-accretive business development and expansion, as well as opportunities in new synergic business areas that will yield higher returns, as and when such opportunities arise,” says Park.

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