PTTGC integrates production with acquisitions
Plan to produce full range of plastic resins
SET-listed PTT Global Chemical Plc (PTTGC), Thailand's largest petrochemical maker, is gearing up production of plastic bottles and film after acquiring a majority stake in two firms worth US$125 million (4.15 billion baht).
PTTGC bought 74% of the shares in Siam Mitsui PTA Co (SMPC), a maker of purified terephthalic acid (PTA), and a 74% stake in Thai PET Resin Co (TPRC), a maker of polyethylene terephthalate resin (PET). The transactions are expected to conclude this year.
SMPC is a joint venture of SCG Chemicals and Mitsui Chemicals Inc (MCI), a Japanese chemical company that produces and sells PTA at a capacity of 1.44 million tonnes per year.
In 2017, SMPC had sales of 23.14 billion baht, with total assets worth 10.67 billion baht.
TPRC is a joint venture of SCG Chemicals, MCI and SMPC. The main business is to produce and trade PET with a capacity of 133,000 tonnes a year. In 2017, TPRC had sales of 5.08 billion baht with total assets of 1.37 billion baht.
PTTGC chief executive Supattanapong Punmeechaow said the two acquired assets suit the company's policy of adding value to existing assets, as PTTGC already has production facilities for ethylene glycol (EG) and paraxylene (PX).
EG is a raw material for PTA while PX is the raw material for PET, which is moulded into plastic bottles and film products.
"Our existing and acquired businesses will make PTTGC's PX supply chain fully integrated vertically, from commodity grade resin to high-grade resin," Mr Supattanapong said. "We already have resin for moulding plastic caps but we lack bottle production facilities, for which this acquisition was in our business policy."
He said demand for plastic bottles and film products in Asia could potentially expand in the range of 5-6% annually.
Meanwhile, PTTGC is poised to expand sales, mainly in Southeast Asia, where there is rising demand for plastic resins. PTTGC recently opened a representative office in Vietnam's Ho Chi Minh City and plans to open facilities in Indonesia and Myanmar.
"The three countries have high demand, as they are emerging markets, and PTTGC is conducting a feasibility study to develop the production facility for petrochemicals in Vietnam as well," Mr Supattanapong said. "Demand for plastic resins in Vietnam in 2017 was at 1 million tonnes, while PTTGC could have a market share of 200,000 tonnes, equal to 20%."
He expects demand for plastic resins in Vietnam to double to 2 million tonnes by 2023.
In the US, PTTGC hopes to form a conclusive plan for its olefins cracker project, a fundamental raw material of commodity-grade plastic resins, in the near future.
The company has teamed up with South Korean construction and chemical company Daelim Industrial to conduct a feasibility study of the cracker business in the US.
PTTGC will invest through PTTGC America, with Daelim designing the front-end engineering of the project in Belmont County, Ohio.
The complex will have an ethylene capacity of 1 million tonnes a year and two units of high density polyethylene, monoethylene glycol and ethylene oxide.
PTTGC shares closed yesterday on the Stock Exchange of Thailand at 83.75 baht, down 25 satang, in trade worth 1.9 billion baht.