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Thai Plastic & Chemicals
Kim Eng Securities (Thailand) has changed its recommendation on Thai Plastic and Chemicals shares from "hold" to "speculative buy", with a fair value of Bt20 apiece
The broker foresees a near-term potential upside for Thai Plastic and Chemicals, because the share price has lagged, with an increase of only 2 per cent since the beginning of the year, while its major product, PVC, has surged 21 per cent in value.The PVC price has soared to US$970 (Bt33,500) per tonne, the highest level this year, compared with about $800 per tonne at the end of last year. The rising PVC price is due to tight supply in China coupled with strong demand. Higher energy prices for both oil and coal have increased production costs of acetylene - which is used in PVC production - causing most domestic Chinese makers to slow production or shut down, resulting in lower PVC supply. The recent announcement of a lower export-tax rebate, from 11 per cent to 5 per cent, is another factor in reduced PVC exports, while European demand for PVC has jumped. The broker believes PVC prices will test $1,000 per tonne in the near term.
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