Note: This week Thailand’s big co’s and the G both discovered the same magic trick… move money from the left pocket to the right pocket and call it a strategy. So sit back, grab sticky rice and some moo ping and enjoy.

Petchem marriage

SCG Chemicals (SCGC) and PTT Global Chemical (PTTGC) are combining their Thai olefins and polyolefins businesses. Details are as follows…

• Combined value c.THB 186.5bn (THB 104.4bn PTTGC side, THB 82.1bn SCGC side) – as of the 28 Oct 2026 board approvals
• PTTGC 56%, SCGC 44%, via share swap, no cash changes hands
• ~7.1m tonnes/yr of olefins capacity, “among the world’s 10 largest polyolefins producers”
• Synergies targeted at USD 150–200m a year (c.THB 5.1–6.8bn), fully realised in ~3 years
• EGM 3 Dec 2026, competition regulator in 1H27, done in 2H27… if everyone says yes

Source: SCGC press release, 29 Oct 2026; The Standard, 30 Oct 2026

The backdrop: a “prolonged downturn” (Bloomberg’s words) and China building petchem capacity like it’s going out of fashion. SCGC’s own CEO, Sakchai Patiparnpreechavud, pins the downturn on excess capacity and price competition, particularly as China keeps expanding production, and expects the pressure to last another two to three years (Source: Nation Thailand, 30 Oct 2026).

The market’s reaction on 29 Oct: PTTGC -8.82% to ฿46.50, SCC -5.76% to ฿262 (SET closing prices; Source: Prachachat, 29 Oct 2026). So… congratulations on your wedding?

So What?

• Does merging two weak businesses make one strong one? Or one big weak one with nicer letterhead?
• No cash, no new capex, same plants. The synergy is maintenance schedules, feedstock and procurement. Useful, but it’s an efficiency story, not a demand story.
• What I’d want to know: does a bigger Thai olefins player actually change anything vs Chinese pricing, or does it just lose money more efficiently?
• And PTTGC sits under PTT (c.45% stake), whose largest shareholder is the Ministry of Finance at 51.38%. So the state’s petchem arm is now the majority partner in Thailand’s biggest petchem merger. Well at least they’re not hiding it.

Handouts season (continues…)

Meanwhile on the other side of the G’s wallet…

• Cabinet on 27 Oct 2026 cut excise on E20 from THB 6.000 to 0.358/ltr and B20 from THB 5.953 to 0.431/ltr, for 3 months (28 Oct 2026 – 27 Jan 2027). Source: Thai Govt / Excise Dept
• Same day: THB 50bn household solar scheme, THB 50k per household, up to 1m households, registration to 31 Jan 2027. The G says it saves households >THB 24.5bn a year in electricity.
• Oil Fund deficit: THB 103.561bn as of 18 Oct 2026 (THB 62.4bn oil, THB 41.2bn LPG).
• The 4-baht/ltr diesel refinery-gate discount expires today, 31 Oct. Not extended but replaced with a smaller one: EPAC (meeting 13/2569, 21 Oct) set a 2-baht/ltr refinery-gate cut for B0, B7 and B20 from 1 to 30 Nov 2026, gazetted 27 Oct. MGR Online notes B7 and B0 retail could go up unless world prices or the Oil Fund move. Source: Nation Thailand; Royal Gazette via MGR Online, 27 Oct 2026

Side Note: the Excise Dept literally says the tax cut is there to “share the burden” of the Oil Fund. As of 21 Oct the fund was subsidising E20 by THB 4.91/ltr. So the fund was paying to keep E20 cheap, and now the Treasury pays instead. Left pocket… right pocket… same brown stained trousers.

Who pays?

• The Finance Minister himself said tax cuts reduce revenue and widen the fiscal deficit… So, us taxpayers. Later (after Ekniti steps down) and with interest.
• The solar one at least buys something that stays on a roof after the handout ends. Is that the least bad of the bunch?
• Winners on paper are sugar cane, cassava and palm oil growers, which the G openly says it wants to support.

Refinery margin haircut

And then, on 28 Oct, the G found THB 10.8bn a year down the back of the sofa.

• The Energy Policy Administration Committee approved a new refinery-gate formula, signed by Energy Minister Akanat Promphan on 28 Oct and in force from 29 Oct 2026
• Out: the “as if shipped from Singapore” freight, insurance and transport-loss costs baked in since 2004. Reserve allowance cut to two-thirds
• Refinery-gate prices down THB 0.0875–0.3548/ltr , c.THB 29.7m a day, THB 10.839bn a year. B7 diesel the most (-0.3548, THB 6.795bn/yr), then gasohol 95 (-0.3203, THB 2.115bn/yr). And it’s meant to stick: “Even after the crisis ends, this roughly THB10 billion a year will not return to Thai consumers’ fuel bills” (the Minister)
• Same day the Oil Fund board cut its B7 subsidy by THB 0.38 to 2.93/ltr, and B7 retail still fell THB 1 to 42.54/ltr (E10-95 and E10-91 down 50 satang to 41.54 and 41.17). How? EPPO’s price structure shows the B7 refinery-gate price at c.THB 38.34/ltr on 28 Oct and 37.02 on 29 Oct, down c.1.32. Only 0.35 of that is the new formula; the rest is presumably a lower Singapore-linked reference price (my reading, EPPO doesn’t split it). Take off the 0.38 smaller subsidy, add 7% VAT, and you land at about THB 1.00 (my maths). Source: EPPO structure via Thansettakij, 28 and 29 Oct 2026
• Since April, 8 diesel refinery-gate cuts already clawed back THB 31.786bn of “excess” refinery profit. Add THB 64.355bn of Oil Fund money and the G says it has spent THB 96.141bn cushioning fuel prices
• Market verdict on 29 Oct: refiners sold off. TOP closed -5.36% at 61.75; BCP, IRPC and SPRC fell c.2–5% intraday, and the five refiner and petchem stocks (PTTGC, TOP, BCP, IRPC, SPRC) lost c.THB 35.4bn of market cap by the midday break (HoonVision). Kasikorn Securities puts the earnings hit at c.8–17% if the formula is fully enforced; Dao Securities calls it negative long term, but limited near term while refining margins stay high. No company statements found yet.

So What?

• Who pays this time? Not the Treasury… the refiners. Third pocket found. And the Oil Fund quietly pockets some of it too, by paying 0.38 less subsidy per litre of B7.
• Granted this should be better for the end users pockets. It’s a fair fix of a 22-year-old fiction, or a permanent tax on refining margins by another name?
• But then again at the sector level: Thai refiners’ margins get thinner for good, while the PTT group (Thai Oil, PTTGC and IRPC, 770k of c.1.24m barrels a day, c.62% of Thai refining capacity per Energy Ministry data for 2024) is also the G’s arm. Same brown stained trousers again.

Interconnectedness

Put the three stories next to one another:

• The state-linked petchem giant merges to survive cheap imports, and the state-run fuel fund is THB 100bn+ in the hole subsidising… fuel.
• THB 50bn for solar roofs vs THB 5.1–6.8bn a year of hoped-for petchem synergies. Meaning the G’s one-off solar cheque is roughly 7–10 years of the merger’s best-case savings (my maths, on their numbers).
• And the third pocket: from 29 Oct the refiners hand back c.THB 10.8bn a year via the new refinery-gate formula. But c.62% of Thai refining capacity is the PTT group, and the Ministry of Finance owns 51.38% of PTT. So the state is the refiner taking the haircut, the petchem partner, the Oil Fund and the Treasury… on every side of the same trade. Different pocket, same brown stained trousers?
• All three are rearranging deckchairs on decent longtail fish boats. Nothing fixes the thing underneath: Thailand imports energy, and China makes plastic cheaper than we do.

Disclaimer: Not advice. No targets, no calls, just a man with a spreadsheet and too many tabs open.

What I’d want to know by 3 Dec: who votes against the EGM, whether the excise cut gets “extended” in January (hint: when has a Thai handout ever ended on time?) and who refills the Oil Fund?

And I’m done!