Siam Cement Mulls Reopening $5.4 Billion Plant as Prices Rebound-OxBig News Network

(Bloomberg) — Siam Cement Pcl is trying to resume operations at its $5.4 billion petrochemicals advanced in Vietnam, amid indicators costs depressed by a interval of oversupply have hit the underside.

The firm, one in every of Thailand’s largest industrial teams, has ready a plan to reopen the Long Son plant in southern Vietnam that’s been shuttered since October owing to weak demand and costs, Chief Executive Officer Thammasak Sethaudom stated in an interview. Resumption of manufacturing can occur in a month after the corporate decides on the reopening, he stated.

A rebound in manufacturing exercise in China amid a tariff truce with the US has helped alleviate some oversupply of low-cost chemical merchandise from the world’s second-largest financial system, stated Thammasak, who took over as CEO in January 2024. 

“This is a sign that prices have probably reached the bottom,” he stated. “That opens the possibility for the Vietnam plant to be brought back to life.”

Siam Cement, wherein Thai King Maha Vajiralongkorn is the highest shareholder, has been saddled with losses at its chemical unit as the worldwide capability glut coupled with the US-China tariff battle depressed demand and costs for chemical compounds comparable to ethylene and propylene utilized in manufacturing of plastics. The Long Son plant, the corporate’s largest abroad funding, has been a significant drag on earnings due to the about 1.2 billion baht ($36.5 million) it spends each month to protect the ability, in addition to service curiosity and different bills.

After the deal earlier this month between the US and China to decrease tariffs, Chinese producers have turned their focus to satisfy the demand within the US, stated Thammasak. The distinction between the value of polypropylene, Siam Cement’s primary chemical merchandise, and value of naphtha, a key uncooked materials, rebounded to greater than $400 a metric ton after the tariff truce earlier than falling again to about $350, he stated.

The Long Son plant can be worthwhile when the unfold of polypropylene and naphtha worth reaches about $380 a ton, in keeping with Thammasak. The chemical merchandise’ revenue margin can be helped by the decrease costs of crude oil.

READ: China-US Trade Soars as Exporters Race to Hit Trade Truce Window

Siam Cement booked a complete web lack of about 6 billion baht from the undertaking within the final two quarters, knowledge confirmed. 

Cement enterprise will nonetheless be the corporate’s largest earnings driver in 2025 because the Thai authorities plans to speed up spending on roads and different public works to spur financial progress, stated Thammasak. Cement gross sales have additionally been boosted by rising demand from neighboring Myanmar, which is accelerating the reconstruction following the March 28 earthquake, he stated.

Siam Cement, arrange in 1913 following a royal decree to provide constructing supplies, has seen its shares achieve 1.2% this 12 months, bucking a 16% slide in the important thing benchmark inventory index.

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