SCC Expects High Energy Price Volatility in Second Half, Accelerates Business Adjustments

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SCC expects energy prices to be highly volatile in the second half of the year, with risks from the Middle East greater than in the first half. The company is accelerating adjustments and sourcing raw materials outside the Strait of Hormuz to cope with the situation, while maintaining this year's investment budget at 30 billion baht, mainly for the cement and building materials business. The project to add ethane gas feedstock at the LSP plant in Vietnam is now 60% complete and is expected to reduce costs by around 200 to 300 million dollars per year. Managing Director Thammasak Sethaudom said during an earnings call that the petrochemical business situation will return to greater balance, but fragility in the Middle East persists, prompting operators to diversify raw material sources outside the Strait of Hormuz. Energy prices remain highly volatile, with the HDPE price spread adjusting from 300 dollars per ton to 400 dollars per ton within one week. Meanwhile, the global economy is showing signs of slowing, with growth expected at around 2.5 to 3 percent, while ASEAN still grows at 5 to 6 percent, with Vietnam having the potential to expand by more than 6 percent. In the first half, investment spending reached 11.064 billion baht, mostly in the cement and building materials group, with another portion in the chemicals business, which must adapt quickly as naphtha costs have risen to 600 to 1,000 dollars per ton, forcing weekly or even daily selling price adjustments. Currently, the LSP plant has halted operations due to insufficient feedstock and is accelerating the switch to ethane gas to reduce reliance on the Strait of Hormuz and achieve lower costs.

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