Siam Cement Group (SCG) Halts 2.75 Million Tons of Olefin Capacity at Vietnam and Thailand Plants

The Siam Cement Group (SCG), Thailand's largest industrial conglomerate, has officially announced the suspension of operations at two of its core petrochemical complexes. The Long Son Petrochemicals Complex (LSP) located in Long Son Commune near Ho Chi Minh City in Vietnam, and the Olefins plant operated by Rayong Olefins Company (ROC) in Rayong, Thailand, have both halted production. Together, these facilities represent approximately 2.75 million tons per year of olefin capacity, making this one of the most significant petrochemical shutdowns in Southeast Asia this year.

The LSP complex represents a 5 billion USD investment and ranks as one of the largest integrated petrochemical projects in Vietnam. Its upstream cracking unit produces 950,000 tons per year of ethylene, 400,000 tons per year of propylene, and 100,000 tons per year of butadiene. Downstream, the facility houses 500,000 tons per year of High-Density Polyethylene (HDPE) capacity, 500,000 tons per year of Linear Low-Density Polyethylene (LLDPE) capacity, and 400,000 tons per year of Polypropylene (PP) capacity, bringing total polyolefin output to 1.4 million tons per year. The ROC plant in Rayong contributes an additional 900,000 tons per year of ethylene and 450,000 tons per year of propylene to the regional market.

SCG attributed the shutdown decision to the continued escalation of conflicts in the Middle East, which has disrupted global petrochemical feedstock supply chains since late February 2026. Following the closure of the Strait of Hormuz, the group attempted to source alternative naphtha and condensate feedstocks through longer maritime routes bypassing the strait. However, this rerouting significantly increased procurement costs, making sustained production economically unviable. SCG concluded that maintaining operations under current cost structures was no longer feasible for either complex.

The LSP shutdown is expected to generate additional monthly maintenance expenses of approximately 250 million Thai Baht, equivalent to roughly 7 million USD at current exchange rates. SCG plans to use this maintenance window to perform scheduled equipment work and to accelerate preparation activities for its ongoing ethane-based feedstock transition project.

The LSP facility has experienced a troubled commercial history. Construction began in 2018 with commercial operations originally scheduled for September 2024. After only one month of production, the plant was suspended due to soaring feedstock costs. Operations resumed in August 2025 when lower crude oil prices restored economic viability. A 500 million USD revamp project is currently in progress at LSP, designed to increase the share of ethane feedstock in the cracker. This conversion is expected to complete in 2027 and is projected to reduce operating costs by more than 30 percent.

To secure long-term ethane supply, SCG has signed a 15-year procurement contract to import approximately 1 million tons of ethane per year from the United States. This strategic shift toward US-sourced ethane aims to stabilize feedstock costs and reduce the group's exposure to Middle Eastern naphtha and condensate markets, which remain subject to severe supply chain disruption since the closure of the Strait of Hormuz earlier this year.

As of mid-May 2026, both plants remain offline with no announced restart date. The shutdown is expected to further tighten regional polyolefin and olefin supply, particularly affecting downstream converters in Vietnam, Thailand, and broader Southeast Asia. Plastics manufacturers and packaging producers across the region have begun seeking alternative sources, although global ethylene and propylene markets remain strained due to feedstock shortages caused by the ongoing Middle East crisis. Industry analysts expect spot prices for polyethylene and polypropylene in Asia to climb further in the coming weeks as inventory buffers are progressively drawn down.