Singapore ICIS News, August 5: Siam Cement Group (SCGC), a leading Thai chemical company, is steadily advancing the ethane feedstock upgrade project at the Long Son Petrochemicals (LSP) integrated complex in Vietnam. This light feedstock modification aims to enhance the cost competitiveness of the Long Son Petrochemicals base, optimize the existing naphtha feedstock structure, and mitigate operational risks arising from supply fluctuations in petrochemical feedstocks from the Middle East.

I. Overall Project Progress: On Schedule, Budget Controlled, Commissioning in H2 2027

SCGC disclosed at an analyst meeting on July 23 that the overall progress of the Vietnam Long Son Petrochemicals ethane revamp project is in line with the plan, budget execution is under control, and the official commissioning time is locked in for the second half of 2027. As of now, the full chain of supporting cooperation has been finalized; contracts for US ethane procurement, ocean transportation, and storage have all been signed, laying the foundation for the feedstock supply chain for project commissioning.

In terms of engineering construction, the construction progress of the supporting cryogenic ethane storage tank, a core facility, is 60% complete, and the revamp of the existing olefins unit has reached 40%, with key nodes advancing steadily.

II. Core Revamp Strategy: Switching to US Ethane to Hedge Geopolitical and Price Risks

This revamp is a core strategic move by SCGC to optimize its feedstock structure and avoid operational risks. Since the outbreak of conflict in the Middle East in February this year, uncertainty in the crude oil and petrochemical feedstock supply chain via the Strait of Hormuz has risen significantly. Consequently, SCGC has actively adjusted its procurement strategy to prioritize non-Middle Eastern feedstocks.

After the project utilizes US ethane feedstock, it will gradually replace traditional naphtha feedstock. On one hand, it leverages the advantages of the ethane cracking process to reduce production costs and enhance production efficiency; on the other hand, it optimizes the feedstock supply structure, diversifies the risk of single-source procurement, and effectively hedges against supply chain instability caused by geopolitical conflicts and crude oil price volatility.

III. Current Status of LSP Operations: Shutdown for Technical Revamp to Cut Costs, Losses Narrow Significantly

To facilitate the subsequent ethane connection revamp work and minimize the impact of later construction, Long Son Petrochemicals (LSP) temporarily shut down for maintenance and carried out preparatory work in mid-May. The restart time for the plant is currently unclear and will be decided flexibly based on subsequent market conditions.

Prior to the shutdown, relying on existing capacity and inventory resources, LSP achieved external sales of 198,000 tons of Polyethylene (PE) and Polypropylene (PP) products in the second quarter of 2026. In terms of operating performance, project losses continued to improve, with the net loss in the second quarter narrowing by 79.5% year-on-year to 631 million Thai Baht (approximately USD 19 million), significantly alleviating operational pressure.

On the financial front, SCGC cashed out 24.9 billion Thai Baht by selling a 14.86% stake in Indonesia's Chandra Asri company. The proceeds will be used for corporate deleveraging and investment in the Long Son ethane revamp project, ensuring the project proceeds in an orderly manner.

IV. SCGC Overall Operations: Core Business Profit Rebounds Significantly, Thailand Base Operates Steadily

In the second quarter of 2026, SCGC's overall operations showed a trend of structural recovery. Affected by one-off non-recurring income in the same period last year, the company's overall net profit declined year-on-year, recording 4.82 billion Thai Baht. However, after excluding LSP losses, inventory adjustments, and non-cash special items, the company's adjusted net profit surged more than 6 times year-on-year to 5.47 billion Thai Baht; adjusted EBITDA excluding LSP more than doubled year-on-year, indicating a clear trend of profit recovery, mainly driven by expanded chemical product spreads and improved earnings from associated companies.

In terms of revenue, although product sales volume declined somewhat, relying on product structure optimization and price support, the company's second-quarter revenue increased by 19.4% year-on-year to 61.01 billion Thai Baht. The parent company SCG's overall operating performance remained robust, with second-quarter adjusted profit doubling year-on-year to 10.83 billion Thai Baht, and adjusted cash EBITDA increasing by 47.3% year-on-year, demonstrating a steady recovery in overall profitability.

On the domestic production front, the Map Ta Phut Olefins plant in Thailand maintained a high operating rate of 90%-95% in the second quarter, focusing on the production of high value-added products with stable profitability; the Rayong Olefins plant remains under shutdown for maintenance, with production expected to resume by the end of the third quarter of 2026.

V. Industry M&A Dynamics: Merger with PTTGC Expected to Close in Q3 2026

SCGC also disclosed progress on major capital operations. The merger with Thai peer PTT Global Chemical (PTTGC) is proceeding in an orderly manner. Preliminary studies for the merger were completed in the second quarter, and completion is expected in the third quarter of 2026. This merger may optimize the market landscape of the chemical industry in Thailand and Southeast Asia.

From：ChemNet