Siam Cement Mulls Reopening $5.4 Billion Plant as Prices Rebound

(Bloomberg) -- Siam Cement Pcl is looking to resume operations at its $5.4 billion petrochemicals complex in Vietnam, amid signs prices depressed by a period of oversupply have hit the bottom.

The company, one of Thailand’s largest industrial groups, has prepared a plan to reopen the Long Son plant in southern Vietnam that’s been shuttered since October owing to weak demand and prices, Chief Executive Officer Thammasak Sethaudom said in an interview. Resumption of production can happen in a month after the company decides on the reopening, he said.

A rebound in manufacturing activity in China amid a tariff truce with the US has helped alleviate some oversupply of cheap chemical products from the world’s second-largest economy, said Thammasak, who took over as CEO in January 2024. 

“This is a sign that prices have probably reached the bottom,” he said. “That opens the possibility for the Vietnam plant to be brought back to life.”

Siam Cement, in which Thai King Maha Vajiralongkorn is the top shareholder, has been saddled with losses at its chemical unit as the global capacity glut coupled with the US-China tariff war depressed demand and prices for chemicals such as ethylene and propylene used in production of plastics. The Long Son plant, the company’s biggest overseas investment, has been a major drag on earnings because of the about 1.2 billion baht ($36.5 million) it spends every month to preserve the facility, as well as service interest and other expenses.

After the deal earlier this month between the US and China to lower tariffs, Chinese producers have turned their focus to meet the demand in the US, said Thammasak. The difference between the price of polypropylene, Siam Cement’s main chemical products, and cost of naphtha, a key raw material, rebounded to more than $400 a metric ton after the tariff truce before falling back to about $350, he said.

The Long Son plant would be profitable when the spread of polypropylene and naphtha price reaches about $380 a ton, according to Thammasak. The chemical products’ profit margin is also helped by the lower prices of crude oil.

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Siam Cement booked a total net loss of about 6 billion baht from the project in the last two quarters, data showed. 

Cement business will still be the company’s biggest earnings driver in 2025 as the Thai government plans to accelerate spending on roads and other public works to spur economic growth, said Thammasak. Cement sales have also been boosted by rising demand from neighboring Myanmar, which is accelerating the reconstruction following the March 28 earthquake, he said.

Siam Cement, set up in 1913 following a royal decree to produce building materials, has seen its shares gain 1.2% this year, bucking a 16% slide in the key benchmark stock index.

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