Thailand's Siam Cement Group (SCG) has pushed back the restart of its Long Son Petrochemicals complex in southern Vietnam to mid-2027, according to a Nikkei Asia report on Tuesday. The delay is tied to a major retrofit: the company is modifying the site to run on US ethane instead of the naphtha it previously used.
Long Son has been offline since April, and SCG had earlier expected it to be back in operation by now. The extended downtime is being used to make a longer-term change that the company believes will lower costs and improve supply security.
Why the switch?
SCG's original feedstock setup left it exposed to disruptions. The company sourced roughly half of its naphtha and propane from the Middle East, meaning any shipping delays or regional tensions could quickly ripple into its operations. By shifting to US ethane, SCG aims to cut that Middle East feedstock exposure to below 25%.
The bigger incentive is cost. SCG estimates that ethane will be about 40% cheaper than naphtha. For a petrochemical cracker, the feedstock bill is typically the largest variable cost, so a 40% reduction could meaningfully lower day-to-day production expenses once the plant restarts. The company also argues the switch improves supply security and reduces emissions compared with its previous setup.
What a cracker does
A petrochemical cracker is a facility that breaks down feedstocks like naphtha or ethane into the basic building blocks for plastics and other chemicals. These products feed into everything from packaging to automotive parts, making crackers a key link in the global manufacturing chain.
Because feedstock costs dominate a cracker's operating budget, the choice of input can determine whether a plant is profitable during downturns. Naphtha is a refined oil product, so its price tracks crude oil. Ethane, a natural gas liquid, has been relatively cheap in the US thanks to the shale gas boom, which is why many producers have been shifting toward it.
What it means for investors
For SCG shareholders, the delay pushes back any potential earnings boost from Long Son to after mid-2027. But the payoff could be significant. If ethane is truly around 40% cheaper, Long Son would move down the regional cost curve. That means it could break even at lower selling prices, or keep running through weak parts of the cycle with less pain.
The implications extend beyond SCG. When an ethane-fed plant returns with a lower cost base, it can add pressure on naphtha-based producers competing to sell into Vietnam and Southeast Asia. The low-cost operator has more room to cut prices while still staying profitable, which could squeeze rivals' margins.
For everyday investors, this is a reminder that feedstock choices matter in the petrochemical industry. Companies that lock in cheaper inputs can gain a durable advantage, but the transition often comes with upfront costs and delays. SCG's decision to absorb a longer outage now suggests it sees the long-term benefits as worth the near-term disruption.
Investors will likely watch for updates on the retrofit timeline and any further cost estimates. The restart date of mid-2027 is still more than two years away, so there is plenty of room for delays or changes in the global energy market that could affect the economics of the switch.
In the meantime, SCG's move fits a broader trend of petrochemical producers seeking cheaper and more secure feedstocks, often from the US. As more plants make similar shifts, the competitive landscape in Asia could shift, with implications for pricing and profitability across the sector.
For those following Vietnam's industrial development, the Long Son project is a notable piece of the country's manufacturing build-out. Its eventual restart could also have local economic effects, from jobs to downstream plastics production.
SCG's announcement comes amid a busy period for corporate decisions in the region, from Dangote Cement shelving its London listing to CSN selling its cement unit. While those are different sectors, they all reflect how companies are repositioning for cost and market conditions.
For now, the key takeaway is that SCG is betting on a cheaper, more secure feedstock to improve Long Son's competitiveness. The success of that bet will only become clear after the plant restarts in 2027.
