HUA HIN : SCG Chemicals, a unit of Siam Cement Plc, plans to be the largest petrochemical player in Southeast Asia by 2018, spurred by its ongoing major investments in Indonesia and Vietnam.
PT Chandra Asri Petrochemical, Indonesia's largest integrated petrochemical firm, of which SCG owns 30%, is spending US$400 million to expand its annual cracker capacity to 850,000 tonnes a year from 600,000 tonnes now.
SCG's $4.5-billion petrochemical joint venture on Long Son island in southern Vietnam is set to produce 1 million tonnes of ethylene when it becomes operational in 2018.
Together with its 1.7 million tonnes of cracker output in Thailand, SCG Chemicals' Asean petrochemical network will have total annual olefin capacity of nearly 6 million tonnes five years from now, said president Cholanat Yanaranop.
Of the total, 3.6 million tonnes are ethylene and 2.2 million are propylene.
In September 2011, SCG acquired a major stake in Chandra Asri for $440 million.
Together with its SET-listed subsidiary, Thai Plastic and Chemicals (TPC), SCG holds a 46% stake in the petrochemical complex in Vietnam, with Vietnamese and Qatari partners holding the rest.
The joint venture is inviting contractors from Japan and South Korea to join bidding for building the factory, with construction to start in early 2015, said Mr Cholanat.
"Our regional goal for 2018 is for Thailand to be our centre for high-value-added (HVA) petrochemical products," he said.
Vietnam will be a manufacturing base for commodity petrochemicals, while the Indonesian factory will serve domestic demand coupled with HVA capacity.
"And the company will expand in other countries as well. For instance, we have PVC [polyvinyl chloride] and pipe factories in Cambodia and Laos," said Mr Cholanat.
He said with continuous expansion, SCG Chemicals expects revenue growth of 5-10% per year excluding contributions from Vietnam and Indonesia. Annual revenue now amounts to 210 billion baht, roughly half the parent's total.
As well, SCG Chemicals will spend 2 billion baht over five years on research and development aimed at boosting the revenue contribution of HVA products to 60% from 50%.
Mr Cholanat said globally, the petrochemical industry is on an upward trend with improving margins thanks to minimal new supplies totalling 5 million tonnes.
Shares of Siam Cement (SCC) closed Friday on the SET at 422 baht, down 10 baht, in trade worth 696 million baht.