Rayong: Thai petrochemical plants are gradually informing customers about the impact of the fighting and closure of the Strait of Hormuz in the Middle East. This has resulted in production shutdowns, potential production reductions, decreased sales, and some customers are adjusting prices. The continued impact on Thai SMEs is being closely monitored.
According to Thai News Agency, the impact of the war and the closure of the Strait of Hormuz in the Middle East is affecting the petrochemical industry in Thailand's Map Ta Phut Industrial Estate in Rayong province, which is the world's eighth largest petrochemical hub with a total installed capacity of approximately 37 million tons per year. Plants are gradually notifying customers of ongoing production shutdowns, potential production reductions, decreased sales, and some are adjusting prices. The impact on Thai SMEs is expected to continue, as petrochemicals affect the entire supply chain, including packaging, construction, automotive, garment, and medical industries.
The Rayong Olefins Plant (ROC) of the SCG Group has declared force majeure, temporarily shutting down the plant. Mr. Thamsak Sethaudom, President and CEO of SCG, stated that the company is closely monitoring and assessing the situation in the Middle East, prioritizing business continuity management, prudent cost management, and maintaining financial discipline to cope with the volatility. In the Chemicals business group, the prolonged and uncertain closure of the Strait of Hormuz, a crucial shipping route for oil and natural gas, has prevented some of the naphtha and propane, key raw materials used in the olefins plants within the Chemicals business, from being transported to their destinations as planned.
Therefore, to cope with this force majeure event, it is necessary to temporarily shut down the ROC plant. ROC has declared force majeure to its partners and customers as per its rights under the relevant contracts. This shutdown of the ROC plant will have an estimated cost impact of approximately 150 million baht per month, as ROC is a highly efficient plant utilizing automation and digitization technologies.
Apart from the temporary shutdown of the ROC plant, other plants in the Chemicals business group, as well as other SCG businesses, are operating normally, adapting their operations to the situation promptly. For example, the cement and construction products business group is continuing to increase the use of alternative energy sources other than oil to reduce energy volatility and enhance competitiveness.
SCG is confident that its financial position remains strong and that it has sufficient cash on hand should the situation prolong. By 2025, it projects adjusted EBITDA of 55,012 million baht, excluding extraordinary items. While other businesses continue to operate normally, the company will closely monitor and assess the situation to adjust its operational plans accordingly, prioritizing the needs of customers and stakeholders. The company will provide updates on any significant developments.
PTT Global Chemical Public Company Limited (GC) clarified to its customers that due to the continued volatility in the global energy and petrochemical markets, coupled with the current military conflict in the Middle East, the industry is facing uncertainty that may affect feedstock supply, production conditions, and logistics. The company is closely monitoring the situation and managing orders appropriately. Delivery schedules and volumes may be adjusted as needed to align with changing circumstances.
Dow Chemical Group Thailand (DOW) informs customers that in recent days, the global energy and petrochemical markets have experienced significant volatility due to heightened geopolitical tensions in the Middle East. These external influences have directly and negatively impacted global supply chains, creating costs and other challenges that are no longer manageable internally. Consequently, the company needs to immediately adjust the price by US$200 per ton for all new orders of Dow's specialty resins until further notice.
IRPC Public Company Limited (IRPC) informed its customers and business partners that it has been closely monitoring the situation in the Middle East to assess the impact on the supply chain and proactively manage risks. This includes adjusting production plans to align with the situation, accelerating the procurement of crude oil from alternative sources with group partners to mitigate damage and reduce potential supply risks arising from unforeseen circumstances, planning and allocating products appropriately, and continuously communicating key information and updates to partners to foster understanding of supply and risk management strategies.
HMC Polymers reported that the closure of the Strait of Hormuz is impacting the global petrochemical industry, creating feedstock constraints and increasing the risk of shortages. This has driven up the prices of crude oil and naphtha, the company's primary raw materials, significantly. Logistical challenges include potential delays in supply, increased freight costs, and higher marine insurance premiums. Furthermore, the Thai government's recent energy security measures have complicated normal production plans. The company anticipates a potential reduction in polypropylene (PP) deliveries in the coming weeks, and production cycles may need to be adjusted to accommodate fluctuations in feedstock arrivals, affecting customer production plans. To mitigate the impact, the company is proactively reorganizing its inventory, reviewing all purchase orders to ensure fair and appropriate inventory allocation, and enhancing real-time communication with customers.