Dow Looks at $2 Billion Projects as Thai Petrochems Endure Volatile Environment

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Researched by Industrial Info Resources (Sugar Land, Texas). Following a meeting with the Deputy Prime Minister and Industry Minister of Thailand, Kosit Panpeimras, with representatives from U.S. companies, it was reported from Bangkok that Dow Chemical will request board approval for five petrochemical projects in the country. The five projects will have a total investment of $1 billion to $2 billion. The minister said that Dow Chemical (NYSE:DOW) (Midland, Michigan) was committed to turning Thailand into its largest production base in Southeast Asia adding that the company was concerned about controlling toxic emissions in the Map Ta Phut industrial estate where the new plants are to be located.

At the end of 2006 Dow Chemical entered into an agreement with Siam Cement Group (Bangkok, Thailand) to invest $1.3 billion into a joint venture ethylene cracker which would make the site the company’s largest in Asia. Ethylene production increased to about 2.3 million tons in 2005 due to the start up of PTT Chemical’s new 300,000 tons per annum (tpa) ethane cracker facility, while consumption increased by 9% from 2004. A possible 20 olefin projects and derivates, and 4 aromatic projects and derivatives are scheduled to start up through 2010. In 2006, Siam Cement announced a project to build a $525 million integrated polyolefin plant scheduled to start production of polyethylene and polypropylene in 2010. For related news item see October 26, 2006 – Dow Commits to $1 Billion Cracker Project in Thailand.

The deputy prime minister’s remarks were made against a highly volatile situation in the country where the Assets Examination Committee had, a couple of days before, decided to freeze the bank accounts of ousted prime minister Thaksin Shinawatra and those of his wife and relatives. It was reported by The Nationthat he might return to the country which could lead to higher tensions and another army coup.

The minister said the current chaos was short term and would not affect investor confidence. Gross domestic product could grow nearly 4% in the second quarter and improve again in the third quarter due to accelerated government spending.

Spokesmen in the industrial sector said that after solving the political crisis, government must provide a major boost and ensure that approved petrochemical projects materialize and increase consumers’ diminished confidence. Thai Chamber of Commerce Vice Chairman Dusit Nontanakorn said the business sector and consumers were cutting spending, because of lack of confidence. Many businesses have suspended overtime work and decreased manufacturing capacity. Some small and medium enterprises have shut down completely.

The petrochemical industry is hoping that the plans of the Board of Investment announced in 2006 for the promotion five categories of companies - those using feedstock such as sodium chloride, chlorine, caustic soda, hydrochloric acid and hydrogen peroxide – will be maintained. It was stated then that the petrochemical industry is vital to national development and could generate $8.5 billion per annum in exports.

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