Thai PTT Chemical sees weaker margins in H2

BANGKOK, July 24 (Reuters) - PTT Chemical PCL PTTC.BK (PTTCH), Thailand's largest olefin maker, said on Thursday it expected margins in the second half of the year to be lower than in the first half due to the rising cost of natural gas.

"Second-half margins should not be better than the first half because costs of natural gas should rise by 15-20 percent," company president Aditheb Bisalbutr told reporters.

Prices of olefins products should fall in the second half of this year because of expectation of falling oil prices and weak demand in a slowing economy, he added.

The firm uses natural gas for about 80 percent of its feedstock and naphtha provides the rest.

PTTCH produces ethylene and propylene, together called olefins, used to make plastics and bottles, especially for the packaging industry. It is a flagship in the olefins petrochemical business of top energy firm PTT PCL PTT.BK.

The company, which is due to report second-quarter earnings next month, has maintained its 2008 revenue forecast of 90 billion baht ($2.7 billion), up 17 percent from last year's 77 billion, Aditheb said.

That is in line with market expectations, with seventeen analysts polled by Reuters Estimates forecasting revenue of 89 billion baht this year.

On Wednesday, the company said it had agreed to buy a 50 percent stake in a Malaysian oleochemicals firm from German chemicals maker Cognis [COGN.UL] for about $164 million, and it expected the deal to be completed by September.

Aditheb said PTTCH would start booking profits from the investment in the fourth quarter of this year and that could help boost revenue to 120 billion baht in 2010.