SCG Chemicals loses $87 mln from Vietnam-based Long Son Petrochemicals in Q1

The $5.2 billion Long Son Petrochemicals (LSP) complex, located in southern Vietnam, eroded THB2.9 billion ($86.7 million) in Q1/2025 net profit of SCG Chemicals (SCGC), an arm of Thailand’s Siam Cement Group (SCG).

In its Q1 performance review, SCG noted that it would have recorded a net profit of THB4 billion ($119.7 million) if not for the impact of LSP. Instead, its actual net profit stood at THB1.1 billion ($32.91 million).

Despite LSP’s losses, SCG reported sales of THB9.95 billion ($297.7 million) in Vietnam during the January-March period, accounting for 8% of its global revenue and ranking second after its home market of Thailand.

The Long Son Petrochemicals Complex, located in Ba Ria-Vung Tau province, has a total designed capacity of 1.4 million tons of plastic resins annually and various other plastic products. At full capacity, LSP is expected to generate $1.5 billion in annual revenue and contribute approximately $150 million to the state budget.

However, just 15 days after commencing operations on September 30, 2024, the facility suspended production due to broader market challenges. LSP stated that operations would resume once profit margins improve.

In February, SCG announced an additional investment of $500 million to upgrade the facility. The plan includes shifting to ethane as a feedstock, either partially or fully replacing naphtha and propane. The upgrade is expected to take 2.5 years, with completion slated for the end of 2027.

In March, SCG proposed the Vietnamese government raise the most-favored nation (MFN) tariff on imported polypropylene (PP) and polyethylene (PE) products to 10% from the current 0%. SCG argued that the tariff increase would help protect Vietnam’s nascent petrochemical industry and reduce dependence on foreign suppliers.

In response, the Ministry of Finance proposed the government increase the MFN tax rate to 2%, which it estimated would generate an additional VND924.6 billion ($35.67 million) in annual revenue for the state budget.

A similar proposal had been rejected in 2023 by the Ministry of Industry and Trade, the VIetnam Plastics Association, and other relevant agencies, citing the domestic PP and PE production capacity’s inability to meet market demand.