Bangkok Post – SCG closes operations at Vietnam complex

SET-listed Siam Cement Group (SCG), Thailand’s largest cement producer and industrial conglomerate, has suspended operations at its Long Son Petrochemicals (LSP) complex in Vietnam to cope with high production costs and the impact of the slowdown in the global petrochemicals industry. market.

The suspension, which will last at least six months, began in mid-October, just about two weeks after LSP began commercial operations with a production capacity of 74,000 tons on September 30.

“We must adjust our business in response to the challenges of the petrochemical industry,” said Thammasak Sethoudom, president and chief executive of SCG.

Global demand for chemical products is slowing and chemical penetration is low. The chemical spread is the difference between the prices of chemical products and their cost, similar to profit margins.

The resumption of operations will largely depend on the spread, according to the SCG.

The petrochemical complex uses naphtha, a fossil fuel product, as the main feedstock to produce high-density polyethylene (HDPE), but naphtha prices are high.

“The difference between naphtha and high-density polyethylene prices is US$300 per tonne due to the slowdown in the global petrochemical market,” said Sakchai Patiparnprichavud, chief executive and president of SCG Chemicals. “If the spread increases to $400 per tonne, we will consider the possibility of resuming work at the LSP.”

The suspension does not mean SCG Chemicals will stop investing in the petrochemical complex, he said.

SCG Chemicals plans to upgrade the LSP to allow the use of ethane, a colorless and odorless gaseous hydrocarbon as a feedstock because it is cheaper than naphtha.

Mr. Sakchai said the company would spend $700 million on new investments, especially building an ethane storage facility.

Besides adjusting the company’s petrochemicals business, SCG also plans to reduce overall costs of companies under its wing by 5 billion baht by 2025, Mr Thammasak said.

It will also reduce working capital by 10 billion baht by the first quarter of 2025 and exit loss-making businesses, he said.

From January to September this year, SCG reported year-on-year revenue growth of just 0.4% to 381 billion baht, with profits falling 75% year-on-year to 6.8 billion.