Strait of Hormuz Disruption Forces Thai Petrochemical Giants to Cut Production and Raise Prices
The Strait of Hormuz disruption is forcing major Thai petrochemical producers like SCG Chemicals, PTT Global Chemical, and Dow Chemical Thailand to implement production cuts and raise prices. Supply chain issues, including delayed feedstock deliveries and increased maritime costs, have led SCG to declare force majeure and Dow to hike resin prices by $200 per ton. Companies like IRPC are seeking alternative crude sources, while HMC Polymers anticipates polypropylene shortages. The crisis is expected to impact Thai SME supply chains across various sectors.
The ongoing disruption in the Strait of Hormuz is causing significant turmoil for Thailand's petrochemical industry, the world's eighth-largest hub. Major producers are consequently notifying customers of production reductions and price increases due to critical feedstock supply shortages. SCG Chemicals, for instance, has declared force majeure at its Rayong Olefins (ROC) plant, citing regional instability that prevents timely delivery of essential naphtha and propane. This shutdown alone is estimated to cost SCG approximately 150 million baht monthly, prompting the company to explore alternative energy sources for its cement and construction divisions to reduce oil price vulnerability.Other key players in the Map Ta Phut Industrial Estate, which has an annual capacity of 37 million tons, are also facing severe operational challenges. PTT Global Chemical (GC) has warned of heightened logistical and feedstock uncertainties, leading to strict order management based on available supply. Dow Chemical Thailand has already announced an immediate price increase of $200 per ton for its specialty resin products, directly attributing the hike to unmanageable external costs driven by escalating geopolitical tensions in the Middle East.To mitigate these supply chain risks, companies like IRPC are actively pursuing crude oil from non-Middle Eastern sources. Meanwhile, HMC Polymers reports that soaring maritime insurance premiums and freight delays are creating severe constraints, predicting potential shortages in Polypropylene (PP) deliveries as it adjusts production to volatile raw material arrivals. The cascading effects of this disruption are anticipated to severely impact Thai small and medium-sized enterprise (SME) supply chains, affecting crucial sectors ranging from food packaging and automotive parts to medical supplies and textiles.
