Kiatnakin Phatra Securities (KKPS) stated that the Siam Cement Public Company Limited (SET: SCC) has taken a significant step in advancing its Long Son Petrochemicals (LSP) ethane project by securing an engineering, procurement, and construction (EPC) contract for crucial ethane storage infrastructure.
This agreement with the consortium of China Tianchen Engineering Corporation and PetroVietnam Technical Services marks a pivotal milestone, following its earlier 15-year supply pact with Enterprise Products Partners for a million tons of ethane annually and a charter deal with Mitsui O.S.K. Lines for ethane carriers.
The LSP project, scheduled to commence operations by Q4 2027, is seen as a cornerstone for the company’s long-term strategy amid challenging market conditions. Without these developments, the LSP complex would struggle to remain viable given current unfavorable chemical spreads. SCC anticipates substantial financial benefits from ethane pricing, estimating savings of around $250 million per year.
However, the venture’s success is contingent upon ethane price stability, a potential risk highlighted by recent price volatility. Ethane costs, after dipping to a low of $141 per ton in 2024, rebounded sharply in 2025 to $188 per ton alongside rising Henry Hub gas prices. This volatility, paired with expectations of low chemical spreads in 2025, could delay the LSP complex achieving full operational capacity until early 2028, based on Kiatnakin Phatra estimate.
SCC plans to fund the $500 million project cost through internal cash flow, anticipating a two-year payback period. Yet, given the inherent uncertainties, Kiatnakin Phatra Securities maintains an Underperform rating for SCC, with persistent caution over market conditions affecting future project profitability.
