SCG Chemicals' Vietnam Unit Resumes Full Operations: Strategic and Financial Implications for Investors in a Post-Pandemic Southeast Asian Chemicals Sector

The resumption of full operations at SCG Chemicals' Vietnam unit, Long Son Petrochemicals (LSP), marks a pivotal moment for the company and the broader Southeast Asian chemicals sector. After a nine-month suspension that began in November 2023, LSP's restart in March 2024 reflects a calculated response to improving operating margins and a strategic pivot to capitalize on market windows amid persistent global volatility. For investors, this development underscores SCG Chemicals' resilience and its ability to adapt to post-pandemic challenges, while also signaling the company's long-term vision for competitiveness in a region poised for chemical industry growth.

Strategic Reorientation: Ethane Feedstock and Global Trade Ties

LSP's $500 million ethane feedstock diversification project, expected to be completed by 2027, is a cornerstone of its strategic repositioning. By transitioning from naphtha and propane (imported from the Middle East) to ethane—a lighter, more cost-effective feedstock—LSP aims to reduce production costs and enhance operational efficiency. This shift aligns with global trends toward low-carbon production and is expected to deepen trade ties between Vietnam and the United States, as the plant is likely to source ethane from U.S. suppliers under a long-term agreement. For investors, this move represents a dual benefit: reduced exposure to volatile Middle Eastern feedstock prices and a strategic alignment with U.S. energy exports, which could insulate LSP from geopolitical risks in the Middle East.

The project also positions LSP to compete more effectively in Southeast Asia's evolving petrochemical landscape. Regional demand for polyolefins, such as high-density polyethylene and linear low-density polyethylene, is growing due to surging demand from construction, packaging, and automotive sectors. By securing a stable, low-cost feedstock supply, LSP can maintain price competitiveness while meeting rising regional demand.

Broader Market Trends: Southeast Asia's Chemicals Sector in 2025

The Southeast Asian chemicals sector is navigating a complex post-pandemic environment. While overcapacity and fluctuating demand have created headwinds, high-growth end markets like semiconductors, electric vehicles (EVs), and green energy are driving demand for specialty chemicals. For instance, the semiconductor industry—critical to Southeast Asia's export-driven economy—has remained a growth engine, with chemicals used in advanced packaging and circuitry seeing robust demand.

Competitors in the region are responding with cost-cutting measures, asset rationalization, and digital transformation. Companies are also prioritizing sustainability, with investments in bio-based feedstocks, carbon capture, and circular economy initiatives. SCG Chemicals' ethane project aligns with these trends, as ethane is a cleaner feedstock compared to naphtha, and its use will reduce the plant's carbon footprint. This positions LSP to meet evolving regulatory requirements, such as the EU's Carbon Border Adjustment Mechanism, which could impact exports to Europe.

Financial Resilience and Investor Implications

SCG Chemicals' financial performance in 2025 highlights its ability to navigate macroeconomic challenges. The company reported an EBITDA of VND23.7 trillion ($904 million) in the first half of 2025, a 21% increase compared to the second half of 2024. This growth was driven by cost optimization, improved chemical product price spreads (due to declining crude oil prices), and the discontinuation of unprofitable businesses. By Q2 2025, SCG's cash reserves had reached VND35.55 trillion ($1.36 billion), reflecting strong liquidity and financial flexibility.

For investors, these metrics suggest a company that is not only surviving but thriving in a challenging environment. The resumption of LSP operations and the ethane project are expected to further bolster margins. By 2027, when the feedstock transition is complete, LSP could see a significant reduction in production costs, potentially increasing EBITDA by 10–15%. Additionally, the company's focus on high-value-added (HVA) products, such as green polymers and acetylene-based materials for EV batteries, opens new revenue streams in high-growth markets.

Risks and Considerations

While the outlook is positive, investors should remain cautious about potential risks. Global economic slowdowns, particularly in China and Europe, could dampen demand for Southeast Asian chemicals. Additionally, the success of LSP's ethane project hinges on the timely execution of the U.S. supply agreement and the plant's ability to integrate ethane into its production processes without operational hiccups.

Geopolitical tensions, such as the Red Sea crisis, could also disrupt supply chains, though LSP's diversified feedstock strategy mitigates some of this risk. Furthermore, regulatory shifts in sustainability standards—such as stricter emissions targets—may require additional capital expenditures.

Conclusion: A Strategic Bet on Southeast Asia's Chemicals Future

SCG Chemicals' Vietnam unit is a microcosm of the broader Southeast Asian chemicals sector's transformation. By resuming operations at LSP and investing in ethane feedstock, the company is positioning itself to capitalize on regional demand growth while aligning with global sustainability trends. For investors, the combination of cost efficiency, strategic feedstock diversification, and a strong balance sheet makes SCG Chemicals an attractive play in a sector poised for long-term growth.

As Southeast Asia continues to emerge as a key hub for petrochemical production and innovation, SCG Chemicals' proactive approach to market dynamics and sustainability will likely drive value creation for shareholders. Investors with a medium- to long-term horizon should consider the company's strategic initiatives as a compelling reason to allocate capital to this resilient and forward-looking player.