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PTTGC sees ‘flat growth’ in 2016

Feb 18. 2016
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By Pichaya Changsorn

The Natio

PTT Global Chemical, the flagship petrochemical arm of PTT Group, expects this year’s performance to be on par with last year’s.

President and chief executive officer Supattanapong Punmeechaow said that even with the high volatility of oil prices, which shrank from US$60 a barrel to $34 last year, PTTGC could manage to book a net profit of Bt20.5 billion in 2015, up 33 per cent from 2014.

PTTGC’s performance this year is likely to be similar, though it has to keep a close watch on the movements of polyethylene prices. Nevertheless, this assumption is yet to take into account a possible gain from a cost-cutting and revenue-enhancement programme that it is to launch shortly, he said.

The company predicts oil prices at $30-40 a barrel and the spread between the prices of high-density polyethylene and naphtha to stay above $700 a tonne this year.

Supattanapong said PTT Group’s restructuring plan for its petrochemical subsidiaries would not affect PTTGC’s Map Ta Phut retrofit project, its largest domestic investment programme, which is expected to commence construction by the end of this year.

He said the restructuring plan that was initiated by PTT’s new chief executive Tevin Vongvanich was a good concept because enhancing efficiency is important during the current economic situation. However, there has been no conclusion yet on whether the streamlining plan will involve a consolidation of shareholding of petrochemical subsidiaries or will involve only more exchange of feedstock among them.

Chief financial officer Duangkamol Settanung said PTTGC was looking to sell some products from its Map Ta Phut retrofit project to PTT subsidiaries such as HMC Polymers, which could source polypropylene from PTTGC instead of SCG, while PTT Asahi Chemical could buy some C4 hydrocarbons from the firm’s new project.

The Map Ta Phut retrofit project will use 1.5 million tonnes of naphtha annually, out of the total 1.8 million tonnes that PTTGC is selling to SCG and shipping to export markets annually, to produce 500,000 tonnes of ethylene and 261,000 tonnes of propylene annually.

C4 hydrocarbons

The new project will also produce more than 100,000 tonnes of C4 hydrocarbons, which include butadiene and other chemicals. Supattanapong said PTTGC was negotiating with two or three foreign companies that have proprietary technologies to form joint ventures to produce high-value speciality chemicals from the C4.

Duangkamol said PTTGC last year booked an impairment loss of Bt2.6 billion for Myriant Corp, its 84-per-cent-owned US-based subsidiary, based on a conservative assumption that its bio-based chemical plant would be able to utilise only 40-45 per cent of its production capacity.

It is now too early to say if PTTGC will have to book additional impairment on the US assets this year, she said.

Regarding its planned $5.7-billion (Bt202 billion) US petrochemical complex, PTTGC is expected to know the construction cost by midyear, and is working with a major ethylene producer to conclude an ethane-feedstock contract by the third quarter.

PTTGC plans to issue debentures amounting to at least Bt9.7 billion this year, to match its loan repayment of the same amount this year, the CFO added.

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