Vietnam’s LSP ramps up utilization; SCG banks on ethane integration and strategic regional pivot

Vietnam’s Long Son Petrochemical (LSP) has returned to the forefront of regional supply dynamics, currently operating at approximately 90% of its capacity. Following a 10-month commercial shutdown that ended in mid-August 2025, the integrated complex—Vietnam's first—is maintaining high run rates despite a soft demand environment that weighed heavily on its parent company's fourth-quarter financials. The aggressive operational posture is paired with rapid progress on a major ethane infrastructure project designed to structurally lower the producer's cost base.

The financial impact of the restart and ongoing strategic shifts are reflected in the latest earnings data from SCG Chemicals, LSP's sole owner and the petrochemical arm of Thailand's SCG group:

SCG Chemicals Financial Performance

*Earnings before interest, taxes, depreciation and amortization
Source: SCG

PROFITABLE FINANCIAL YEAR MASKED BY Q4 DEPRECIATION

Despite the widening fourth-quarter net loss of THB 4.5 billion ($145 million) for SCG Chemicals, the underlying operational narrative reveals a successful turnaround strategy. The Q4 deficit was heavily skewed by a THB 3.27 billion depreciation expense directly tied to the LSP facility, which effectively offset the immediate profits generated by the plant’s restart during that period.

However, looking at the full year, the resumption of LSP's output was the primary catalyst pulling SCG Chemicals back into the black, generating a net profit of THB 1.46 billion for 2025—a sharp reversal from the THB 7.99 billion loss posted in 2024. This recovery was further insulated by reduced inventory losses and a rigorous restructuring program that yielded THB 4.3 billion in annual savings. 

A strategic pivot toward high-value-added (HVA) products, such as engineered resins and specialty polymers, also helped defend overall margins against a backdrop of soft demand. During Q4 2025, the olefins chain recorded a healthy sales volume of 713,000 tons, with LSP contributing 327,000 tons to that total. Yet, polyolefin margins remained a pressure point; full-year PE margins were flat, while PP margins deteriorated compared to the previous year.

THE ETHANE ADVANTAGE: FUTURE-PROOFING FEEDSTOCK

To mitigate exposure to crude-linked naphtha volatility, SCGC is advancing a $500 million ethane integration project aimed at structurally lowering LSP’s production costs. The flexible cracker is designed to operate with up to 70% gas-based feedstock, allowing the use of ethane or propane.

The company said supply contracts for US ethane, shipping and storage have been secured, while construction of an on-site ethane storage tank is approximately 40% complete. The project is scheduled for startup before end-2027 and is expected to materially reduce feedstock costs across LSP’s downstream portfolio, which includes 500,000 tons/year of HDPE, 500,000 tons/year of LLDPE and 400,000 tons/year of PP.

Beyond operational optimisation, SCG is sharpening its strategic focus on Vietnam as a core growth engine. Backed by estimated GDP growth of around 8% in 2025 and an official target of 10% in 2026, the group expects Vietnam’s contribution to consolidated sales to rise from 9% currently to 15% by the end of the decade.

Going forward, the company signalled that capital discipline will take precedence, with an emphasis on “asset-light” transformative initiatives rather than large-scale capacity expansion. For regional markets, LSP’s sustained high utilisation and evolving feedstock slate are set to remain pivotal in shaping polyolefin supply balances, even as demand recovery remains uneven.

($1 = THB 33.78)

Written by: Aiman Haikal