Foreign interest gives union petrochemical more time to think

Originally, the company planned to begin construction during this quarter, but will put it off until the next quarter.

The new plant will produce ethyl acetate and butyl acetate, solvents used in making industrial paints, with an annual production capacity of 50,000 tonnes.

Union Petrochemical is looking for a partner that can provide manufacturing technology.

Deputy managing director Perajed Suwannapasri yesterday said two or three "new faces" from China and South Korea were offering partnership proposals that included provision of raw materials and financing. Union Petrochemical is also talking to two prospective investors from China that are offering production technology.

"We must be careful in choosing a new partner," he said. "The newcomers are offering us both raw materials and financing. However, we prefer a partner that will provide more technology than money, because we have sufficient cash flow and easy access to money within Thailand."

The company also wants to wait for lower prices for steel, the main raw material in building the new plant, after the Olympic Games finish, and steel plants in China resume operations.

Construction of the new plant, which is expected to cost Bt200 million to Bt250 million, will be divided into two phases: the first to produce 30,000 tonnes of ethyl acetate a year; and the second to produce 20,000 tonnes of butyl acetate per annum. All of the production will go to the local market.

Perajed said Union Petrochemical had gradually adjusted its product prices 10-15 per cent since last month, due to oil-price hikes. Petroleum is a key ingredient in solvents. The company may consider increasing its product prices another 3-5 per cent in the second half of the year if oil prices remain high.

Union Petrochemical is also close to concluding deals with Esso and PTT Phenol to act as an agent in distributing oil machinery in the Northeast excluding Nakhon Ratchasima and chemical solutions, respectively. If the deals are finalised, Union Petrochemical expects to generate Bt120 million in revenue a year from the Esso contract and Bt400 million per year from PTT Phenol.

"We may revise upwards the company's revenue target for this year after the announcement of our second-quarter operating results," Perajed said. "Earlier, we had targeted revenue of Bt2.5 billion for the year. We expect that may increase to Bt2.7 billion, due to the adjustment of product prices and additional revenue from the Esso and PTT Phenol contracts."