29 October 2012 14:30 [Source: ICIS news]
SINGAPORE (ICIS)--Malaysia’s PETRONAS Chemicals Group (PCG) is planning to discontinue its vinyl business from the beginning of next year in a bid to optimise its product portfolio and boost its output of high-margin products, the company said on Monday.
The company’s vinyl business consists of three plants at Kertih in Malaysia as well as in Vung Tau, Vietnam, PCG said.
The vinyl chloride monomer (VCM) and polyvinyl chloride (PVC) plants in Kertih are owned by Vinyl Chloride (Malaysia), a wholly owned subsidiary of PCG, while the PVC plant in Vietnam is owned by Phu My Plastics and Chemical, a subsidiary of PCG.
PCG will cease operations at its VCM and PVC plants in Kertih from 1 January 2013 and will then decommission the units.
The company will also initiate a divestment process for the sale of its interest in Phu My Plastics and Chemical.
The vinyl business is not as closely integrated within PCG’s product value chain as it obtains its ethylene dichloride (EDC) feedstock from the open market and has not been able to capture the synergies of the group’s integrated business model, PCG said.
The vinyl business is also “susceptible to the cyclicality of its feedstock market”, it said.
In addition, the VCM plants require high annual spending to operate and maintain the facilities, the company said.
"With the discontinuation, PCG will have additional flexibility to divert ethylene, currently committed to Vinyl Chloride (Malaysia), towards production of higher margin products within the group’s portfolio," it added.
PCG will record a charge of Malaysian ringgit (M$) 560m ($184m, €142m) in the fourth quarter of this year due to costs incurred from the discontinuation of the vinyl business.
($1 = M$3.04, €1 = M$3.94)
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