Thai Olefins expects product spread to fall in 2004

22-Sep-05

Thai Olefins PCL , Thailand's second largest olefin maker, it expects its product spread to fall this year due to rising raw material costs. Though revenues this year would be 30-33 billion baht (US$733-806 million), due to high product, but the spread between prices of raw materials and products is lower. The average margin on ethylene production this year was slightly lower at US$400 from last year's level. The lower margin was not the result of slower demand but rather the cost-push effect that required producers to cut sale prices to meet the purchasing power of end users. Thai Olefins 49.99% owned by top energy firm PTT PCL, increased its ethylene capacity to 685,000 tpa late last year from 385,000 tpa. Production capacity also includes 190,000 tpa o f propylene. Though Belgium's Solvay has raised stake in Vinythai to almost 50%, Thai Olefins will keep its 20% stake in Vinythai , Thailand's second-largest polyvinyl cholride (PVC) producer. Under Thai stock exchange rules, a bidder must make a tender offer to buy the remaining shares it acquires 25% of a firm. Thai Olefins is in the process of merging with National Petrochemical PCL , Thailand's third-biggest olefins maker, at the behest of PTT, which owns 38% of NPC. The merger is expected to be completed in December.