Siam Cement not to reduce operational level due to water crisis

05-Jul-05

Most analysts have remained optimistic over the long term prospects of Siam Cement (SCC) despite recent concern over a possible water shortage on the Eastern Seaboard and a weakening of petrochemical spreads. Some feel that the SCC's cement unit will not help to outweigh the weakness in petrochemicals as desired. Spreads are also likely to come under pressure from a new supply of at least 2 million tons of petrochemicals expected to come on stream in the H2-2005 and 3 million tons in 2006. SCC had planned to cut the operating level of its petrochemical plants in Map Ta Phut Industrial Estate in Rayong by about 40% starting end of June, may not decrease its operational level. Production levels will be maintained due to assurances of enough water supply by the government. Though petrochemical peaks are expected to extend until 2007, demand for petrochemicals could weaken in the future as uncertainty about the global economic health persists, along with concerns about the direction of China's economy and its currency.