Thai petchems unaffected by truckers strike

12 June 2008 07:52  [Source: ICIS news]

SINGAPORE (ICIS news)--A nationwide truckers’ strike in Thailand is not expected to cause too much disruption to petrochemical operations in the country and the industry is more concerned with the continued rise in the value of crude, said industry sources on Thursday.

"We do expect transportation costs to go up, but we are willing to pay for it," said a market player adding that some companies already had a fuel price variable added into their contracts with customers.

The truckers’ strike, which began on Wednesday, was not expected to hit operations and logistics, she said referring to the Confederation of Transportation of Thailand’s (CTT) threat to send in "hundreds of thousand of trucks into Bangkok if no satisfactory measures were taken by the government by 17 June".

"Most petrochemical companies should have their own organic fleet of trucks, any increase in transportation costs, they should be able to shoulder. It’s big business we are talking about here," said Pongpan, an analyst with securities firm, Kim Eng Securities.

However, what could hurt the petrochemical industry was the continued rally in crude values, he added.

The ongoing political instability in the country was also expected to have limited impact on the Thai petrochemical sector, added Pisit Juatirak, analyst with brokerage and investment banking firm, CLSA.

"Profitability remains to be mainly driven by spread, which is largely based on the regional outlook. I do not expect the sector to be hit much by these protests, it is more of an annoyance really," he added.

Truck drivers in Thailand were protesting the almost 30% rise in diesel prices since the beginning of the year to baht (Bt)40/litre ($1.21/litre) on tight supplies, high demand and skyrocketing feedstock prices.

Thousands of trucks have been parked in queues stretching up to 10 kilometres along the Bang Na Trad highway on the outskirts of the nation’s capital, Bangkok as well as along other major highways in Chonburi, Rayong and Nakorn Sawan provinces.

The surging prices of fuel have sparked protests globally including South Korea, India, Malaysia and various parts of Europe.

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By: Bohan Loh
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