02/27/2015

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THAILAND: SCG Chemicals poised to grow on weak oil prices

President Cholanat Yanaranop said falling oil prices would not adversely affect company revenue. On the other hand, it provides room for the company to make a greater profit margin, as the spread between naphtha, the main raw material from oil, and HDPE, the final product, is bigger. \"Falling oil prices have helped to benefit our company, as our raw material costs are lower, widening the spread between naphtha and HDPE to about USD 700 a tonne,\" he said, referring to the average spread last year, which was only USD 650 a tonne. Cholanat said declining oil prices had also encouraged his company to revise its investment plan to capitalise on greater profit. \"We see it [the falling oil price] as a good time to take advantage of weaker oil prices and will accelerate our investment, especially in Vietnam,\" he said. SCG plans to build a USD 4.5-billion petrochemical complex in Vietnam. The project, a joint venture on Long Son island off of southern Vietnam, will produce 1 million tonnes of ethylene annually when it becomes operational in 2018. Together with its SET-listed subsidiary Thai Plastic and Chemicals Plc, SCG owns 46% of the complex. Vietnamese and Qatari partners own the rest. The group recently bought a 400-hectare plot on Long Son island on which to build Vietnam\'s first petrochemical complex. \"We\'re about to finalise a deal on construction costs and expect to start building the plant immediately once that\'s done,\" Cholanat said. He said weaker oil prices also encouraged SCG Chemicals to acquire other petrochemical companies. Cholanat said his company would focus more on high-value-added products, expecting to increase their sales proportion to 29% this year from 27% last year. Source: Daily \"Bangkok Post\", Bangkok; 14 Feb 2015
(Syed Rashid Ali, Karachi, Pakistan)

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