10% reduction in petrochem output announced by Siam Cement on rising feedstock costs

08-Jul-08

Naphtha costs that have been rising over the past year have forced Thailand's biggest industrial corporation, Siam Cement SCC to plan a petrochemical output reduction. With the price of naphtha doubling from last year, Siam Cement's 1.25 mln ton unit will cut output by 10% to reduce costs due to rising raw material costs. Despite the lower petrochemical output, petrochemical revenues are expected to rise on account of surging oil and petrochemical prices to 150 bln baht (US$4.5 bln) this year. This surpasses an earlier forecast of 120 bln baht, and is higher than the 110 bln baht recorded last year. However, petrochemical margins are not estimated to be better than last year because raw material costs are rising at a faster pace than selling prices of plastic products. The company's joint venture petrochemical plant in Iran scheduled to come on stream next year will also get delayed due to construction problems. The plant is designed to produce 300,000 tpa of high density polyethylene (HDPE).