IRPC plans to halve its 68.1 billion baht in budgeted capital expenditure for the next five years as demand falters.
IRPC Plc, the petrochemical arm of PTT Plc, plans to halve its 68.1 billion baht in budgeted capital expenditure (capex) over the next five years (202024) in line with falling global demand for polymers as a result of the coronavirus pandemic.
The five-year investment budget formerly included 54 billion baht for new projects and 14.1 billion baht for asset acquisition.
IRPC chief executive Noppadol Pinsupa said the company is halting plans to develop an aromatics production plant, its Maximum Aromatics project (MARS), as well as an asset acquisition scheme.
MARS was projected to be located at the company’s petrochemical complex in Rayong municipality, but the project will be postponed.
The output of MARS is a raw material of fundamental plastic for auto parts, polyester and nylon for the textile industry.
Mr Noppadol said the 32.5-billionbaht MARS development budget will be put on hold, while other committed development projects will stay on the budget.
MARS was designed to produce up to 1.3 million tonnes of paraxylene and 300,000-500,000 tonnes of benzene a year based on a feasibility study conducted in 2017.
IRPC plans to cut capex in 2020 by 30%, formerly set at 6.96 billion baht, in line with its policy to keep high liquidity during the drop in refined oil and petrochemical demand.
A further 8.99 billion baht will go towards the Ultra Clean Fuel project to revamp refined oil production in compliance with Euro 5 international environmental standards.
The company will spend a combined 10.6 billion baht for a 12.5-megawatt solar power farm, an ABS production plant project at 6,000 tonnes a year and an annual maintenance programme.
Other projects in the pipeline include an E4E and IRPC 4.0 project, which is an online economic monitoring platform that is expected to improve margins through real-time understanding of economic models. E4E and IRPC 4.0 cost a combined 458 million baht.
“Projects that are not important will be delayed based on the growing uncertainty caused by the coronavirus pandemic and, to a lesser extent, the
US-China trade war,” Mr Noppadol said.
He said that since the downturn in the industry started early last year, China’s plastics makers have suspended purchase orders from IRPC, which had to shift sales to Asean and Australia to offset the drop in revenue.
“Now that China has controlled the outbreak, petrochemical purchase orders have gradually resumed,” Mr Noppadol said.
To deal with business setbacks, IRPC has geared its petrochemical products towards auto parts, electrical parts and commodity-grade polymers to avoid competition with regional peers.