Bangkok: SCG Chemicals or SCGC, a leader in polymers and integrated solutions for sustainability, is enhancing its competitiveness amidst ongoing volatility and intense competition in the petrochemical industry by adjusting its business plan to focus on cash flow management and strengthening its financial position. Simultaneously, the Long Son Petrochemicals (LSP) plant in Vietnam is gearing up to resume commercial operations.
According to Thai News Agency, Mr. Sakchai Patiparnpreechawut, Chief Executive Officer and President of SCGC, indicated that while the petrochemical sector in the latter half of the year remains volatile with significant competition, several factors such as geopolitical conflicts, uncertainty over US tariffs, and increased oil production capacity from OPEC+ have dampened demand. However, the suspension of high-cost, low-competitiveness factories has balanced the increased supply, suggesting the industry has surpassed its lowest point and will stabilize, as evidenced by the rise in the spread between product and raw material prices from the first quarter of 2025.
Mr. Sakchai noted, “Although competition remains fierce, the situation will not worsen as we have passed the lowest point. It will take time for demand to rise, and the demand for plastic pellets is tied to the global economy. When the global economy improves, demand will increase. We expect the petrochemical industry to be in a similar state in 2-3 years, but not worse.”
Despite a severe and prolonged downturn in the petrochemical cycle, SCGC is poised to address challenges with both short-term and long-term strategies. In the short term, SCGC is focusing on cost management, boosting productivity, and maintaining a flexible sales portfolio. For the long term, the company is investing in Vietnam, enhancing competitiveness by importing ethane from the United States, expected to take 2-3 years. The Long Son Petrochemicals Vietnam (LSP) is currently preparing for commercial operations resumption.
Regarding reciprocal tariffs, Thailand has yet to finalize import tax rates, but SCGC’s exports to the United States are minimal, and raw material imports from the US to Thailand are low. The Vietnamese plant will import ethane from the US at a 0% tax rate, avoiding direct impacts. However, indirect impacts are anticipated due to competitive factors, and potential higher import taxes could reduce Thailand’s competitiveness. The private sector is concerned about an influx of leftover products into Thailand, which could undermine local products, prompting discussions with relevant agencies for solutions.
SCGC is bolstering competitiveness by focusing on key strengths such as international innovation research and development, creating high-value-added products and environmentally friendly polymers. The ‘i2P Center’ (Ideas to Products) facilitates global innovation collaboration, helping meet market demands swiftly.
The company is improving factory management through digital technologies like AI and Robotics and Automation systems, enhancing productivity and safety while predicting machinery futures accurately. This approach is exemplified in the Nawaplastic Industry Factory’s PVC production, achieving world-class robot density levels.
Additionally, SCGC is expanding its expertise into the Industrial Service Solutions sector with ‘DRS by REPCO NEX’ (Digital Reliability Service Solutions), enhancing machine maintenance across industries like power plants, oil and gas, and more.
By-products from production processes are being utilized to develop new business opportunities, such as using acetylene for lithium-ion battery electrodes and polyolefins by-products for temperature control and energy-saving solutions under the ‘CHILLOX’ brand.