SCG Chemicals Expected to Start Production at Long Son Plant in September 2023

Long Son Petrochemicals, owned by SCG Chemicals (SCC.BK), will start commercial production at its petrochemical complex in southern Vietnam in September, the head of Thai conglomerate Siam Cement Group told Reuters on Monday.

The company is in the process of testing each operating unit at the complex, Siam Cement Group's Roongrote Rangsiyopash said on the sidelines of an industry event.

Siam Cement Group owns SCG Chemicals.

Testing will be completed in July or August, so commercial operations could start around September, Rangsiyopash said.

The $5.4 billion plant in Ba Ria Vung Tau province will produce polyethylene, polypropylene and basic chemicals, he said.

"The total demand for the country is around 3.3 million tonnes of both polyethylene and polypropylene combined, our complex (production capacity) is about 1.3-1.5 million tonnes. So, I would assume that the majority of the products that will be consumed locally," he added.

He also said for the first year, some of the products will be exported to countries in Southeast Asia like Thailand and Indonesia to balance the supply and demand until Vietnam can fully absorb the supply.

Petrochemical demand has been struggling globally recently amid economic headwinds and poor demand in China. Refiners' profit margins on processing naphtha to make ethylene turned negative this month for the first time since October.

He said there is no recovery in sight in the second half of the year, as China consumption remains poor despite their reopening.

Because of slowdown in demand and lower chemical product price, 2023 revenue growth will be flat from last year, even with the increase in capacities from the LSP complex startup, he further said.

Bulk of the plant's raw materials, naphtha and propane, will be imported from the Middle East, he added.

Separately, the company could list 25.2% or 3.85 billion shares in an IPO this year. Rangsiyopash said they had time until October to decide on the IPO plans and it might be shelved depending on market conditions.

"The market environment now is really challenging. IPO market throughout the world has been really, really slow," he added.

Reporting by Mei Mei Chu Editing by David Goodman and Louise Heavens