SCG Chemicals plans overseas expansion

Strategic move

"We now export around 30 per cent of our production. This will increase to more than 50 per cent because it will go toward serving countries where demand remains high, such as China, Southeast Asian nations and India," Sommai Sirilertsombat, managing director of the SCG Polyolefins and SCG Plastic units, said yesterday.

The new plant, which is located in Rayong, will have an annual capacity of 400,000 tonnes of high-density polyethylene and 400,000 tonnes of polypropylene.

Demand for both products is forecast to drop this year and pick up next year, he said.

Global demand is expected to contract by 1 per cent for polypropylene and grow by less than 0.5 per cent for polyethylene.

In Thailand, demand growth for polypropylene may fall almost 5 per cent because of the plunge in the fortunes of the automotive and electronic industries, while growth for polyethylene will be about 0.5-1 per cent thanks to demand from the packaging industry.

SCG Chemicals has offices in five countries: Vietnam, China, Japan, Indonesia and the Philippines. It plans to open another office in Dubai to expand its customer base in the Middle East.

Besides the customer-based expansion, SCG Chemicals has set a goal to shift to high value-added products as its core business by 2015.

"We have no new expansion projects because of the current oversupply, but we will give importance to research and development to increase our proportion of high value-added products instead," Sommai said.

High value-added products will account for 40-50 per cent of production, which will help the company respond to customer requirements better and increase our capability to penetrate every market.

He added that the company would invest to improve its production capacity from a commodity focus into a value-added focus for serving demand in niche markets, while new joint-venture projects would concentrate on producing high value-added products used in mass-customisation items.

Meanwhile, SCG Chemicals is reviewing its projection for the global oil price, which it previously predicted at about US$60 (Bt2,053) per barrel for this year.

An upward trend in oil prices will make competition in the second half tougher because of the implementation of new plants in the Middle East, Sommai said.