JG Summit shuts down petrochemicals

MANILA, Philippines — Conglomerate JG Summit Holdings Inc. is shutting down indefinitely its petrochemicals unit amid industry challenges.

In a statement, JG Summit Olefins Corp. (JGSOC) said that it is currently on an indefinite commercial shutdown given persisting unfavorable market conditions in the global petrochemical industry.

“JGSOC continues to evaluate various options to mitigate the adverse effects of challenging market conditions and will make the appropriate decision in due course,” it said.

JGSOC said that it would continue to sell from existing product inventory during the shutdown.

LPG trading operations of subsidiary Peak Fuel Corp., meanwhile, will remain unaffected by the shutdown.

In November last year, JG Summit announced that it is injecting fresh capital of up to P17.1 billion to JGSOC to pay off maturing obligations.

A wholly owned subsidiary of JG Summit, JGSOC is engaged in acquiring, designing, constructing, operating and maintaining a naphtha cracker plant and related facilities for the production of products such as polymer grade ethylene, polymer grade propylene, pyrolysis gasoline, mixed C4, pyrolysis fuel oil and other products and their by-products.

The company has undertaken transformation initiatives to support the business amidst the global oversupply.

The initiatives include using targeted account management to serve key customers, being more selective with its export markets, fortifying governance over its pricing process and launching best-in-class reliability programs.

Despite the business’ newer downstream products offering some cushion, industry-wide polymer spreads dropped to historic lows and weighed on JGSOC’s EBITDA during the nine-month period last year, closing the period with a P3.8-billion loss.