Long Son Petrochemical Complex has temporarily suspended commercial operations and will restart production when the market recovers. The complex will also receive an investment of 700 million USD to upgrade it to use more competitive raw materials.
Long Son Petrochemical Complex has temporarily suspended commercial operations - Photo: NGOC HIEN
On November 1, SCG Group (Thailand) announced its business results for the third quarter and the first 9 months of 2024.
Temporarily suspend commercial operations, invest 700 million USD in upgrading
Mr. Thammasak Sethaudom - President and CEO of SCG - said that in the first 9 months of 2024, SCG recorded revenue of VND 266.13 trillion (equivalent to USD 10.66 billion).
Profit in the period reached VND4.79 trillion (equivalent to USD192 million), down 75% year-on-year, mainly due to operating costs for the Long Son Petrochemical Project (LSP), lower petrochemical product profit margins, and lower profits from joint ventures.
Notably, SCG Group also informed about the temporary suspension of commercial operations of the Long Son petrochemical project.
According to SCG, Long Son Petrochemical Complex (Ba Ria - Vung Tau) will start commercial operation from September 30, 2024 with an initial output of 74,000 tons in the testing phase.
For the petrochemical industry, the group focuses on managing production of all three plants, including Rayong Olefins (Thailand), Map Ta Phut Olefins (Thailand) and Long Son petrochemical complex to adapt to input material prices, market demand and global economic situation, as well as maximize the company's competitiveness.
SCG said that the Long Son petrochemical complex "has temporarily suspended commercial operations to manage total business costs, with plans to restart when market conditions are more favorable."
According to SCG, the petrochemical industry continues to face challenges in the industry as supply exceeds demand and global demand declines. The company is striving to enhance its long-term competitive advantage by investing and upgrading the Long Son petrochemical complex using ethane gas imported from the US.
"This move will help reduce production costs, as ethane is a competitively priced feedstock in the global petrochemical industry, while increasing flexibility in selecting raw materials for production," SCG said.
According to SCG, the project has a total investment of about VND17.5 trillion (US$700 million), mainly allocated for the construction of ethane storage tanks and supporting facilities for receiving raw materials. The project is expected to be completed by the end of 2027.
Petrochemical industry declines, will resume production when the market recovers
SCG said the Long Son petrochemical complex has achieved an output of 74,000 tons of plastic pellets during the testing phase.
However, in the third quarter of 2024, excluding the non-recurring financial income from the termination of the interest rate swap (IRS) at Long Son worth VND 1.56 trillion, SCG's petrochemicals business recorded a net loss of about VND 2.63 trillion (equivalent to USD 105 million) due to the impact of exchange rates from the appreciation of the Baht and the decrease in equity income from associates.
Long Son Petrochemical Complex is the largest petrochemical project in Vietnam with an investment of up to 5 billion USD - Photo: LS
Long Son petrochemical complex alone recorded a net loss in the third quarter of 2024 (excluding IRS) of about VND 1.56 trillion (equivalent to USD 62.9 million).
In the first 9 months of 2024, Long Son recorded fixed costs for downstream production operations, mainly depreciation and interest.
SCG said that in the last quarter of this year, fixed costs from upstream operations will be recognized after commercial operations stabilize.
However, in the face of the global petrochemical industry's decline with oversupply and declining demand for petrochemical products, Long Son petrochemical complex has had to temporarily suspend commercial operations and will restart production when the market recovers.
"This is a strategic decision, demonstrating the project's ability to flexibly adapt to changing and challenging market conditions, and is also an opportunity for the Long Son petrochemical complex to prepare to seize opportunities when the market recovers," an SCG representative affirmed.
Investing in Long Son petrochemical complex to reduce raw material costs
According to SCG, in the long term, green initiatives and a comprehensive green growth strategy open up many business opportunities and advantages for enterprises. Therefore, the group invested an additional 700 million USD in the project to increase ethane gas feedstock at the Long Son petrochemical complex to reduce input material costs.
SCG said the move helps enhance competitiveness in the global petrochemical industry, as well as contribute to reducing CO2 emissions in the production process.
In Vietnam, SCG recorded sales revenue in the first 9 months of 2024 of VND 25.67 trillion (equivalent to USD 1.03 billion), up 17% year-on-year, mainly thanks to revenue growth from the petrochemicals group SCG Chemicals (SCGC).
Source: https://tuoitre.vn/scg-tam-ngung-van-hanh-thuong-mai-to-hop-hoa-dau-long-son-o-viet-nam-20241101215543436.htm
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