By Malini Hariharan
A source close to the company said that revamping of Titan's two crackers have been evaluated including expansion of derivatives and building new downstream units at Titan's Pasir Gudang complex in Malaysia.
Titan's No1 cracker has a capacity of 285,000 tonnes/year while the second cracker is of 435,000 tonnes/year. Its derivative slate includes polyethylene (PE), polypropylene and aromatics.
An industry analyst thinks that expanding both crackers to 600,000 tonnes/year is possible and the figure was confirmed by the source close to Honam.
Pic source: Titan Chemical
But expanding the cracker beyond this level could be challenging given the size of the Southeast Asian market and capacities of competitors in Singapore and Thailand,
"Honam has considered this and will do things their way based on their expertise in experience in the business; they will realise higher competitiveness. Also synergies are possible in management of the Titan complex and in marketing and sales," said the source.
The acquisition, he added, fits in with Honam's strategy of boosting domestic and international competitiveness in petrochemicals by securing economies of scale.
As for the price of the acquisition, Honam could have got the asset cheaper if it had waited for the bottom of the petrochemical cycle. "But it has been pursuing Titan with a long-term view; they are confident that the cycle can be managed," he added.
More details on Honam's global strategy tomorrow.