Dow and Siam Cement reinforce plans for Asia elastomer plant

By Steve Toloken | PLASTICS NEWS STAFF

Posted August 13, 2009

BANGKOK, THAILAND (Aug. 13, 1:55 p.m. ET) -- The drop in global chemicals demand will not slow a specialty elastomer plant in Thailand planned by a joint venture of Dow Chemical Co. and Siam Cement Group, the two companies said Aug. 10.

The world-scale facility, in the Asia Industrial Estate in Rayong province, will come on stream in 2011 as planned, as part of the company’s plans to bolster its Asian operations, according to the statement from SCG-Dow Group.

One industry analyst suggested that the Dow statement is in reaction to speculation in the Thai media that the SCG joint venture was under consideration to be spun off, amid the cutbacks and uncertainty at Dow.

The analyst said Dow’s earlier comments that it wanted to spin off an Asian olefins derivatives operation had fueled speculation about SGC-Dow, but added that Dow never intended that to mean its Thai operation.

Dow on July 30 said it was spinning off a Malaysian olefins derivates unit, Optimal Group, to its joint venture partner there, the Malaysian-government owned petrochemical firm Petronas.

“I think Dow is just reassuring the world that the Siam Cement JV is a critical one for Dow and not in threat of being spun off,” the analyst said.

The analyst said the company feels it needs an Asian elastomer plant to complement facilities in the United States and Europe, a point echoed by Midland, Mich.-based Dow in a statement.

“Despite the plunge in chemical demand triggered by the worldwide economic downturn and the very challenging economic environment, Dow remains focused on its strategy to invest in its downstream performance businesses and to drive growth in Asia Pacific,” said Heinz Haller, executive vice president of Dow’s Performance Products and Systems unit.

The plant will supply products globally but may in time ship only within Asia, as demand there fully develops, he said.

The plant will manufacture the company’s Affinity polyolefin plastomers and its Engage polyolefin elastomers.

SCG-Dow is a joint venture formed in 1987 between Dow and Siam, which is Thailand’s largest industrial conglomerate. The JV makes polystyrene, polyethylene and other products.