SCC to see lower Q2 petchem margins

10 July 2007 11:29  [Source: ICIS news]

BANGKOK (ICIS news)--Siam Cement, saw high oil prices squeeze petrochemical margins in the second quarter, a trend likely to continue in the next three months, a company spokesman said on Tuesday.

 

Rising prices of raw material naphtha caused the spread with high-density polyethylene (HDPE) to drop to between $605-$615/tonne, down from $681/tonne in the first quarter, the spokesman said.

 

The second-quarter spread between naphtha and propylene has dropped to $610-$620/tonne from $673 in the first quarter, while the naphtha-toluene spread fell to $205-$210/tonne from $263/tonne in the first three months of the year.

 

A spike in benzene prices has maintained the spread with naphtha at between $370-$380/tonne, the spokesman said.

 

Although the spreads of HDPE and propylene will fall from the first quarter, they are still higher than last year so far.

 

However, the company expects the HDPE-naphtha spread for the year to fall below last year’s average of $650/tonne due to more supply in the global market.

 

Purified terephthalic acid (PTA) margins should remain poor due to high paraxylene (PX) tightness and an oversupply of PTA, with operating rates in Asia at lower than 90%, the spokesman said. But the higher crude prices should bolster benzene and toluene prices.

 

Chemicals accounted for 45% of SCC’s Bt8.1bn operating profit in the first quarter, down from 50% of Bt9.2bn in the same period last year.

 

Thailand's largest industrial conglomerate plans to report its second quarter results on July 25.

 

($1 = Bt31.61)

By: Daniel Ten Kate
+65 6780 4359

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