Thailand’s SCG to cut operating rates at PE, PP plants

Thailand’s SCG to cut operating rates at PE, PP plants

Singapore, 9 March (Argus) — Thailand's Siam Cement (SCG) plans to reduce operating rates at its polyethylene (PE) and polypropylene (PP) plants from 100pc to 80pc in April, on high feedstock costs and margin concerns.

SCG operates a 152,000 t/yr low-density PE plant, a 120,000 t/yr linear-low density PE plant, a 920,000 t/yr high-density PE (HDPE) plant and a 720,000 t/yr PP plant in Map Ta Phut, Thailand. Its upstream naphtha-based crackers are expected to see similar production cuts for the same period.

SCG's production cut is expected to tighten duty-free HDPE and PP supplies, its main export grades, in southeast Asia. The producer is also expected to shut a 140,000 t/yr PP unit from late April to late May for a planned maintenance.

The Russia-Ukraine conflict has driven upstream crude oil and other feedstocks prices to multi-year highs, including naphtha, a feedstock for majority of southeast Asian producers. The spike in naphtha prices early this month were eroding margins of regional PE and PP producers, but higher PE and PP prices seem difficult to achieve in the short term on weak downstream demand. Such concerns were heard among regional producers and considerations for similar production cuts are taking place.

Downstream plastics converters were