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Higher raw materials and energy costs, over-capacity and uncertain global demand could further weaken its financial performance and margins, as well as reduce its financial flexibility, Fitch said.

This comes in the midst of the company's substantial investment in new capacity expansion during 2008-2010, while potential concurrent increases in capacity by key competitors could put further downward pressure on SCC's margins and push up its financial leverage higher than currently anticipated.

However, this could be partly mitigated by the group's continuing flexibility on its investment plan during 2009-2010 and its ability to generate cash through further sale of its non-core investments. In addition, a weakening global macro-economic environment, led by the impact from a US recession will likely intensify and extend the down-cycle of its core businesses, particularly petrochemicals, which accounts for about 50 per cent of the group's earnings before other items.

At the same time, Fitch affirmed SCC's National Long-term rating and its senior unsecured debentures at 'A+(tha)', as well as its National Short-term rating at 'F1(tha)'.

- The Nation