UpdateThai PTTGC Q2 profit shrinks 90% as product prices fall

08 August 2012 06:25  [Source: ICIS news]

(adds details on product prices)

ThailandSINGAPORE (ICIS)--Thailand’s PTT Global Chemical posted a 90% drop in its second-quarter 2012 net profit to baht (Bt) 851m ($27m) as softer demand and declining crude oil values drove down product prices, the firm said late on Tuesday.

Overall sales for the June quarter increased by 5% year on year at Bt139.2bn, while earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 57% to Bt6.71bn, the company said in a statement.

Plant utilisation rate at its olefins business improved to 89% in the second quarter with no shutdowns at facilities, up from 84% in the same period last year, it added.

But prices of polymer and aromatics products declined in April-June 2012 compared with the previous year because of slowing external demand, the firm said.

“[The PX and benzene] price decrease was in respect to the weakening demand for intermediate and downstream derivative products from the economic crisis in Europe and economic slowdown in the US and China which resulted in high inventories among intermediate and downstream derivative producers and pressured those producers to lower their operating rates,” it added.

Demand for intermediate and downstream derivative products in Europe, US, and China grew at a slower rate in the second quarter, forcing Chinese polyester producers to cut their plants’ run rates.

Faltering demand from these producers forced purified terephthalic acid (PTA) makers in Asia to delay plant restarts in the second quarter, which in turn led to lower demand for PX, according to PTTGC.

Lower demand for intermediate and downstream derivative products also led to higher inventories of benzene, the company said.

Uncertainty in the global economic situation also had a negative impact on the polymers market, with the average price of high density polyethylene (HDPE) falling by 9% year on year to $1,376/tonne in the second quarter, it said.

Average prices of linear low density polyethylene (LLDPE) slipped 3% year on year to $1,342/tonne over the same period, while prices of low density polyethylene (LDPE) fell 20% to $1,349/tonne, weighed by lower demand from the US and Europe, the company said.

The slowdown in the Chinese economy in the second quarter weakened demand for polyester fibres that in turn weighed on the average price of monoethylene glycol (MEG), the firm said.

PTTGC said that its average prices of MEG fell by 13% year on year to $1,149/tonne in the second quarter.

China, a major market for PTTGC, currently has an oversupply of MEG, having imported huge volumes from Saudi Arabia, Singapore, Taiwan and the US since end-2011, the company said.

($1 = Bt31.5 / $1 = €0.81)

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By: Nurluqman Suratman

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