Lotte Chemical Faces Supply Disruptions, Production Reduced
Lotte Chemical Indonesia (LCI) is facing supply disruptions of raw materials due to the previous closure of the Strait of Hormuz, a consequence of the conflict between the United States (US) and Iran. As a precautionary measure, the company is reducing production to maintain business continuity. LCI states that the disruptions in the Strait of Hormuz area have a significant impact on the availability of key raw materials such as naphtha and LPG.
“LCI is still operating to date but with reduced production levels,” said Director of Management Support at PT Lotte Chemical Indonesia, Cho Jin-Woo, in an official statement quoted on Thursday (9/4).
The production reduction is being carried out because the raw material procurement routes have been forced to change due to existing logistical obstacles. LCI also ensures that evaluations are conducted daily to monitor the situation and maintain transparency as conditions evolve.
In facing this situation, Cho admitted that his side is actively taking various alternative steps to secure supplies from other sources, in order to maintain production continuity and meet customer needs. Cho also emphasised that the allocation of current product stocks and production capacity is largely prioritised for the domestic market. Supply distribution is being carried out in a measured manner to maintain the stability of the national downstream industry.
“In this uncertain situation, our top priority is to maintain the continuity of domestic industry supplies. LCI continues to optimise available resources to minimise the impact of disruptions on customers,” Cho stressed.
To address this, LCI stated that government assistance would be very meaningful for the company, including the simplification of regulations to accelerate the raw material import process, the application of 0% import duties on LPG as a raw material, and temporary fiscal assistance to offset the exponential surge in the global supply chain crisis.
“This includes assistance to seek safe exit routes for LCI’s raw material transport ships that are currently stranded in the Strait of Hormuz,” said Cho.
He added that government support is also expected to provide important security, not only for the current conditions but also for the domestic industry in the future.
“This is so that our production activities can continue and provide positive impacts for the government’s planned downstreamisation programme,” he concluded.