The Siam Cement Public Company Limited (SET: SCC), a major player in Thailand’s industrial sector, is preparing to resume its $5.4 billion petrochemical facility in Vietnam, the Long Son Petrochemicals, after suspending the operation late last year.
The company stated that the resumption is due to signs that the market’s price slump has stabilized. The Long Son complex, located in southern Vietnam, was idled last October due to lackluster demand and declining prices, as explained by CEO Thammasak Sethaudom. A one-month timeline is expected for production resumption once the decision is finalized.
The revival is fueled by increased manufacturing activities in China, following a détente in the US-China trade tensions, which has somewhat mitigated the excess of inexpensive chemical goods from China.
SCC’s chemical division has faced financial challenges, attributed to a glut in global production capacity exacerbated by tariff conflicts between the US and China, which depressed demand and pricing for key chemicals like ethylene and propylene, integral to plastics manufacturing. The Long Son facility, as Siam Cement’s largest foreign investment, has been a financial burden, incurring monthly costs of approximately 1.2 billion baht for maintenance, interest, and other operational expenses.
The easing of trade barriers between the U.S. and China earlier this month has redirected China’s chemical production towards satisfying American demand, Mr. Thammasak explained. The polypropylene-naphtha spread, a vital measure for Siam Cement’s profitability in chemical products, initially soared to over $400 per metric tonne post-tariff truce, before stabilizing around $350. Profitability for the Long Son plant will be achievable once this spread exceeds approximately $380 per tonne, he indicated, also noting that lower crude oil prices are enhancing profit margins for chemical products.
Siam Cement has incurred expenses (depreciation and interest) totaling approximately 6,000 million baht in 2024, according to SCC’s disclosure in its Management and Discussion for 2024 operation.
Despite the setbacks in the chemical market, Mr. Thammasak maintains that the cement business will continue to be the principal revenue generator for Siam Cement in 2025. This outlook is supported by the Thai government’s increased infrastructure spending on roads and public projects to stimulate economic growth. Additionally, rising cement demand from Myanmar, prompted by reconstruction efforts after the March 28 earthquake, provides further support to the company’s cement sales.
