PTTCH Secures Palm Oil Supply for Subsidiary
By Busrin Treerapongpichit, Bangkok Post, Thailand
Jul. 17–PTT Chemical, the petrochemical arm of PTT Plc, has secured a bulk supply of palm oil from four local companies to fuel its project to produce raw materials for personal-care and cosmetic products.
The company yesterday signed an agreement with four palm oil makers to secure raw materials for its downstream subsidiary, Thai Oleochemicals Co (TOL).
Four companies — Lam Soon (Thailand) Plc, United Palm Oil Industry Plc, Chumporn Palm Oil Industry and Palm Biz Corporation Ltd — signed the deal.
Under the agreement, the four will join hands to supply TOL with between 50,000 and 100,000 tonnes per year of crude palm oil. The deal will come into effect when TOL starts its $170-million production plant in the last quarter of this year, according to Aditheb Bisalbutr, the president of PTT Chemical.
TOL is one of the biggest oleochemicals producers in Thailand, which is a key feedstock of two downstream plants. These include 130,000 tonnes per year of fatty alcohol used in medical and personal care products, as well as 600,000 litres per year of methyl ether, which is an additive for biodiesel and glycerin.
TOL requires 300,000 tonnes of crude palm oil per year to run at full capacity. Therefore, it is negotiating with a number of local palm oil suppliers since it still needs to source palm oil feedstocks to ensure supplies for the plant.
Mr Aditheb forecasts that TOL will generate eight billion baht in revenue next year, or 10 percent of PTT Chemical’s targeted revenue based on 95 percent production capacity utilisation.
Kongkrapan Intarajang , TOL’s managing director, said the company’s plant in Rayong’s Eastern Industrial Estate would help replace oleochemical imports worth three billion baht per year.
To meet its ambitious target to become the oleochemical market leader in Southeast Asia, the company is ready to expand both production lines to cope with increased demand.
“As long as personal, home-care products and bio-diesel demand is still growing, we will have lots of room to grow in the local market. In addition, any excess output could lead to strong growth in the export market,” Mr Kongkrapan said.
He said the company was considered the country’s largest crop-based fuel additive production centre. However, its output remained inadequate to serve local demand.
Conventional diesel consumption volume now stands at 56 million litres a day, and is projected to reach between 60 million and 65 million litres in 2011 after the government phases out regular diesel in favour of biodiesel B10, a 10 percent blend of bio-based fuel mixed with regular diesel.
Mr Kongkrapan said the company was waiting for the government to consider its requests for an import tax exemption on crude palm oil to reduce the risk of feedstock shortages.
PTTCH shares closed yesterday on the SET at 106 baht, up four baht.
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