Nov. 4--The petrochemical industry is expected to slow down in the final quarter with possible price declines before facing an oversupply in 2010, according to SCG Chemicals.

The petrochemical unit of SET-listed Siam Cement Group said new ethylene crackers in the Middle East and China with output estimated at 11 million tonnes would start delivering products from the last quarter of this year and potentially bring down prices.

Supply would exceed demand next year, said Cholanat Yanaranop, president of SCG Chemicals. "We are expecting the price to be on the downtrend."

Fortunately, the global economic crisis has forced plants with a combined capacity of 5 million tonnes to shut down. At the same time, petrochemical demand has begun to recover as the world economy has stabilised.

SCG Chemicals in the third quarter reported net sales of 29.6 billion baht, up 27 percent on a quarterly basis due to higher polymer prices and sales volume but down 24 percent year-on-year on lower prices.

Earnings before interest, tax, depreciation and amortisation improved 18 percent quarter-on-quarter and 21 percent year-on-year to 5.95 million baht as a result of the higher sales volume while operations were at full capacity.

Net profit was 4.17 billion baht, up 28 percent from the previous quarter and 39 percent year-on-year.

In the third quarter, naphtha prices shot up on rising demand for gasoline in the US and Europe, resulting in an average price of $609 per tonne, up $95 from the previous quarter but down $406 year-on-year. Monomer and polymer prices remain healthy.

Prices of polyolefins also moved up, with high-density polyethylene reaching $1,250 a tonne, up $106 quarter-on-quarter but down $459 from a year before.

SCG's total polyolefins sales volume in the third quarter was 271,700 tonnes, up 17,200 tonnes from the previous quarter and 25,900 tonnes year-on-year.

Shares of Siam Cement (SCC) closed yesterday on the SET at 204 baht, down 4 baht, in trade worth 269.4 million baht.

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