IRPC Plc, the petrochemical arm of PTT Plc, is accelerating its restructuring programme as prolonged weakness in the global petrochemical and refining industries pressures earnings and forces producers to adapt to a more challenging business environment.
The downturn is driven by significant capacity expansions, particularly in China and the Middle East, subdued demand for plastic-based consumer goods, trade tensions and rising transport costs.
In response, IRPC is moving away from commodity-grade products and reducing its exposure to petrochemical market volatility.
Torsang Chaipravat, senior executive vice-president for corporate accounting and finance at IRPC, said the company is focused on building long-term operational flexibility by improving production efficiency and aligning output more closely with market demand.
“We want to produce exactly what customers need rather than hold inventories while waiting for orders,” she said.
As part of its risk management strategy, IRPC plans to cut its reliance on Middle Eastern crude oil imports, reducing the share from 70% to 30%, to minimise risks associated with oil shipments through the Strait of Hormuz.
Ms Torsang said crude oil prices are expected to remain between US$80 and $90 per barrel in the second half of the year if geopolitical conflicts continue, but could fall to $70-80 per barrel should tensions ease.
While disruptions to oil transport linked to conflicts in the Middle East have boosted gross refining margins as a result of higher oil prices, she said the benefit has largely been offset by increased crude shipping costs, freight charges and marine insurance premiums.
The global petrochemical sector, particularly in Asia, is also facing greater feedstock price volatility and intensifying regional competition.
To protect profitability, IRPC plans to diversify its plastic resin portfolio and broaden its range of products.
The company is also pursuing asset recapitalisation by evaluating the monetisation of non-core assets. Potential projects include using its land and utility infrastructure for data centre development and expanding commercial tank farm services.
The plan also includes debt reduction measures.
IRPC is increasing its focus on higher-value products, including speciality materials and environmentally friendly products, said Ms Torsang.
The company aims to accelerate commercialisation of speciality innovations such as high-performance protective coating solutions.
In March, IRPC and Germany-based Berger, a paint and coatings manufacturer, established the joint venture IBIC to operate in the industrial steel structure paints and coatings business.
To improve competitiveness, IRPC plans to deploy artificial intelligence technologies, including AI chatbots and automated flare-monitoring and plastic-defect detection systems, while improving workforce efficiency to lower production costs.
Capital expenditure is capped at about 3 billion baht annually over the next three years, focused mainly on plant maintenance and small, high-return projects, she said.
The company also remains committed to reducing greenhouse gas emissions by 20% by 2030 and achieving net-zero emissions by 2050.