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"We are worrying that the domestic economy will stay sluggish for the rest of the year since it has been strongly affected by the global economic slowdown and local political turmoil," said Supachai Watanangura, chairman of the Petrochemical Industry Club of the FTI.

Petrochemical prices remained high in the first six months due to the delay in plant construction in the Middle East. However, some supply from new plants in the Middle East scheduled to be released towards the end of this year will soften up petrochemical prices, he said.

Rising oil prices and sluggish consumption will hammer margins below last year's 9 per cent, down to 2-3 per cent on average in the second half of this year, he said.

In the first quarter, the four listed petrochemical firms saw margins varying between 2 per cent and 25 per cent.

IRPC eked out a net profit of Bt1.6 billion on revenues of Bt62.3 billion for a net profit margin of only 2.5 per cent.

PTT Aromatics and Refining managed a profit margin of only 2.08 per cent by making a net profit of Bt1.4 billion on total revenues of Bt70.9 billion.

Thai Plastic and Chemicals' profit margin of 8.04 per cent came from a net profit of Bt689.9 million and total revenues of Bt8.5 billion.

PTT Chemical Plc boasted a net profit margin of 25.42 per cent by scoring a net profit of Bt5.7 billion from total revenues of Bt22.4 billion.

Besides, rising oil and gas prices have boosted the cost of feedstock. Polypropylene increased 30 per cent from the beginning of this year to US$1,900 per tonne last month.

"It's possible that the cost will go so high that plastic-converters will need to suspend production. When petrochemical firms are in this situation, they will manage by shutting down their plants for maintenance instead of shouldering a loss," he said.

Local firms need to explore new markets such as South America, South Africa and Eastern Europe as well as strictly control their production and logistics costs, he said.

The trend in the country's petrochemical industry is to seek partners overseas, particularly in the Middle East, to search for cost-competitive feedstock.

"It is necessary for us to transform our industry to sell value-added products with reasonable prices for feedstock. Otherwise we'll find it hard to survive if we're stubborn about competing in commodity value chains," he said.