SCC eyes stronger Q2 as energy crisis forces petrochemical strategy reset
SCC is positive on its second-quarter outlook as it moves to secure alternative feedstock, manage petrochemical risks and cut energy costs.
Siam Cement Public Company Limited (SCC) expects its performance to remain strong in the second quarter of 2026 after reporting satisfactory first-quarter results that improved from the same period last year, president and chief executive Thammasak Sethaudom said.
A key strategy is managing the petrochemical business by accelerating efforts to secure alternative core feedstock to replace supplies disrupted by the war and the closure of the Strait of Hormuz.
SCC’s petrochemical business relies on naphtha imports through the Strait of Hormuz for as much as 50% of total demand, while only 20% comes from sources that do not pass through Hormuz. The remainder comes from domestic sources.
As a result, the temporary inability of naphtha carriers to pass through the Strait of Hormuz has created a shortage of feedstock, not only for SCGC but also across the global petrochemical market, with overall supply disappearing by more than 46 million tonnes.
In the short term, the company has set up a daily problem-solving team, or daily war room, to plan raw material sourcing, take care of customers and adjust production plans quickly in response to the situation. The move is intended to help the company cope with sharp volatility in crude oil and naphtha prices.
Thammasak said the war room is necessary because naphtha prices have risen from US$720 per tonne in the first quarter to US$1,050 per tonne in April since the conflict began. This has made inventory management more difficult, as buying at the wrong time could hurt performance.
SCC has also adjusted production to focus more on high-value added (HVA) products in order to maintain key customers, as these products are difficult to replace. By contrast, commodity products are easier for customers to source from elsewhere.
At the same time, the company is pushing ahead with energy-saving projects to reduce the impact of higher diesel costs, including the use of electric vehicles for transport, which should lower expenses over the long term.
SCC has also adapted its operational strategy to maintain efficiency. It decided to suspend operations at Rayong Olefins Co Ltd (ROC) early in the war to manage risk, but is now considering restarting operations if sufficient feedstock can be secured.
The company will also use the temporary shutdown of the LSP plant in Vietnam to accelerate improvements that will allow the plant to use ethane as feedstock. This is expected to improve margins, as ethane prices do not fluctuate in line with crude oil prices in the same way as naphtha. The upgrade is targeted for completion in the second half of 2027.
Beyond the LSP improvement plan, SCC is also studying a possible joint venture in Thailand’s olefins and polyolefins business between SCG Chemicals Public Company Limited (SCGC) and PTT Global Chemical Public Company Limited (PTTGC). The study is expected to take about five months, with a detailed study team now being set up.
Thammasak confirmed that both parent companies, SCGC and PTTGC, would remain in place. The plan would only involve combining assets in the olefins and polyolefins business to establish a new joint venture company.
If the partnership can be formed, he said it would create value and allow the business to compete comfortably at both global and regional levels. It would also strengthen both upstream and downstream operations, helping the companies better withstand future crises.
For the cement and building materials business, SCC plans to expand its low-carbon cement products into ASEAN markets, especially Vietnam and Indonesia, to generate profit while responding to environmental demand.
The packaging business is expected to grow in line with the trend of manufacturers relocating more production into ASEAN, which will increase demand for packaging.
SCC has prepared an investment budget of 30 billion baht for this year. In the first quarter of 2026, it had already invested around 5.482 billion baht.
Thammasak said that, although SCC continues to grow, the current situation remains highly volatile and uncertain. The company will therefore invest cautiously, focusing on businesses that can deliver faster returns and support the direction in which SCC plans to move.
