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26.3 C
Philippines
Thursday, February 20, 2025
26.3 C
Philippines
Thursday, February 20, 2025

JG Summit closes P150-b petrochem plant in Batangas

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Conglomerate JG Summit Holdings Inc. said Thursday it closed down its P150-billion petrochemical plant in Batangas province due to lingering global slump in demand.

“Given persisting unfavorable market conditions in the global petrochemical industry, JG Summit Olefins Corp. [JGSOC] is now on an indefinite commercial shutdown,” JG Summit said in a statement.

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JG Summit said while on shutdown, JGSOC would continue to sell from existing product inventory.

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

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

JG Summit in November said it would inject up to P17.1 billion to JGSOC to cover maturing obligations. It also infused P11 billion in 2023.

The conglomerate has been supporting its petrochemical business over the past few years amid the global slowdown in demand.

The petrochemical business has also been a drag to the group’s performance over the past few years.

JGSOC booked a net loss of P11.4 billion in the first nine months of 2024 due to higher financing costs and additional depreciation from the fully-completed plant expansion.

Analysts said the continued weak performance of JG Summit’s petrochemical business has been a factor to the decline in the company’s share price.

Revenues rose 53 percent to P39 billion due to the increased plant operations resulting in higher sales across all products this year.

JGSOC operates the first and only naphtha cracker plant in the country, which produces the olefin raw materials ethylene and propylene used as feedstock by the downstream polymer plants.

It produces over 1 million metric tons of petrochemical products per year. Last year, JGSOC inaugurated its 160-hectare expanded facility in Batangas City.

JGSOC markets its petrochemical products to over 30 countries worldwide.

Aside from petrochemical business, JG Summit also has investments in property development, airline transportation, food manufacturing and infrastructure.

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