SCG predicts crude oil to hit $74 in Q4
SCG Chemicals, a subsidiary of Siam Cement Group (SCG), forecasts global crude oil prices of US$74-75 per barrel in the fourth quarter.
Global crude oil prices have increased more than $10 per barrel since early this year, said Cholanat Yanaranop, president of the chemicals business at SCG.
The fuel factor has narrowed spread prices against naphtha by $100 per tonne from the beginning of this year to $600 per tonne for polypropylene (PP) and to $700 per tonne for high-density polyethylene (HDPE).
“As a result of the narrow spread, we have already increased our sale prices of petrochemical products to reflect the actual costs,” Mr Cholanat said. Overall global orders of plastic granules are falling because of the global trade war, led by the US and China, he said.
“But we hope increasing global crude oil prices will not affect on our sales revenue beyond what we can handle because we are focusing on high value-added [HVA] products and services, instead of commodity products,” said Mr Cholanat.
HVA revenue represents 31% of overall SCG sales and SCG expects to increase this contribution by 1-2% annually.
HVA revenue in the first six months stood at 91.1 billion baht, up by 6% from the same period last year.
For HVA, SCG signed an R&D agreement to develop an innovative dental product with the Faculty of Dentistry, Mahidol University, and Dental Council of Thailand, with the aim of promoting innovation and replacing imports, lowering expenses by 20-30%.
The agreement will also provide greater public access to medical care as the products will be listed as Thai innovation under the Finance Ministry.
The chemicals segment posted revenue of 110 billion baht during January to June, up 5.8% from the same period last year.
SCG’s chemicals segment is one of the largest integrated petrochemical companies in Asia, manufacturing and supplying a full range of petrochemical products, from upstream monomers to downstream polymers including PE, PP, polyvinyl chloride and polystyrene.
In a separate development, Mr Cholanat said SCG has drawn interest from many state agencies and corporate companies for the pilot floating solar farm project in Rayong province.
“The floating solar farm is undergoing a feasibility study as SCG expects to upgrade this project for commercial purposes in the near future as Thailand has the opportunity and efficiency to develop a solar energy system along with plenty of human-made water resources such as dams and reservoirs,” Mr Cholanat said.
SCG expects Thailand can generate 6% of total power from the floating solar farms at 3,000 megawatts.