GC exits venture amid competition

SET-listed PTT Global Chemical (GC) has decided to withdraw from PTT Asahi Chemical, a petrochemical company that is a joint venture with multinational Japanese chemical company Asahi Kasei Corporation, attributed to tougher competition in Asia.
Competition is intensifying as China is exporting more petrochemical products to the Asian market after the US opted to impose a high tariff on products, especially those used to produce plastics, from China.
This trade barrier has emerged even though the Asian market has already been flooded with petrochemical products.
“GC is unlikely to avoid the impact, which will lead to lower product prices,” said Narongsak Jivakanun, chief executive of GC.
His company made a 50% investment in PTT Asahi Chemical, with the other half of the investment coming from Asahi Kasei Corporation.
PTT Asahi Chemical’s main products include acrylonitrile and methyl methacrylate. Both acrylonitrile and methyl methacrylate are raw materials for manufacturing plastics that are required in various industries ranging from cars and electronics to food packaging.
GC’s decision to leave PTT Asahi Chemical was approved during a meeting of its shareholders on Nov 15.
Mr Narongsak expects the withdrawal process to be completed by 2028.
Without any investment from GC, PTT Asahi Chemical will need to discontinue sales and supplies of products to its customers from Jan 1, 2025.
Kongkrapan Intarajang, chief executive and president of national oil and gas conglomerate PTT Plc, GC’s parent company, announced earlier that PTT would consider decreasing its subsidiaries’ shareholding in some petrochemical businesses.
In addition to GC, IRPC Plc, the petrochemical arm of PTT, also falls under this shareholding reduction plan.
According to GC, stronger competition in the petrochemical market was among the factors behind the company’s losses in the third quarter this year, which stood at 19.3 billion baht, compared with a profit of 1.4 billion baht in the corresponding period last year.
The company reported an impairment of assets, namely PTT Asahi Chemical and Vencorex, a petrochemical manufacturer.
GC earned 149 billion baht in the third quarter, a decrease of 11% from the second quarter this year.