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Thailand’s Siam Cement cuts petrochemical output by 10%


July 5, 2008

Thailand’s Siam Cement cuts petrochemical output by 10%
Siam Cement, Thailand's biggest industrial conglomerate, said on Friday it planned to cut petrochemical output by 10 percent this year due to rising raw material costs, reported Reuters.

With the price of naphtha doubling from last year, Siam Cement's petrochemical unit will cut output to 90 percent of its 1.25 million tonne capacity to reduce costs, SCG Chemicals president Cholanat Yanaranop, told reporters.

A joint venture petrochemical plant in Iran would also be delayed to next year due to construction problems, he said.

The plant is designed to produce 300,000 tonnes of high density polyethylene (HDPE) plastic pellets per day.

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Despite the lower petrochemical output, Cholanat expected petrochemical revenues to rise to 150 billion baht ($4.5 billion) this year from a previous forecast of 120 billion baht, and compared to 110 billion baht last year.

Cholanat said the revision reflected surging global oil prices, which had pushed up petrochemical prices.

"The revenue forecast of 150 billion baht for this year is based on a crude price of $130-$140 a barrel," he said as oil neared $145 a barrel on Friday.

"But our petrochemical margin will not be better than last year because raw material costs are rising at a faster pace than selling prices of plastic products," he said.

The spread between HDPE and naphtha was $659 a tonne last year. Petrochemical revenues contribute about half of Siam Cement's total revenues.

Siam Cement's other core businesses are cement, paper, building materials and distribution.

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