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Titan Petrochemical Group Limited has announced that the main focus of the Titan Group’s supply chain business is to be centered on its bunkering businesses in Singapore, Malaysia, Hong Kong and Mainland China.

The Hong Kong-listed company revealed this week that the business of Titan Group is to be restructured to focus more on its storage and shipyard operations, and scale down its supply chain activities.

The company is substantially reducing its trading business, which is capital intensive and exposed to risks associated with market volatility and will consider suitable opportunities to sell the business to third parties. After the restructuring, the main objective of the supply chain business will be to focus on bunkering activities in key locations in Asia.

As part of this exercise, Titan plans to reduce headcount in Singapore and Hong Kong by 56 from 205 to 149. The restructuring and the corresponding cost-reducing measures (one time costs of which are estimated at around US$1 million to US$1.5 million) are expected to result in annual cost savings of US$2.8-3.3 million.

Furthermore, if the planned scale down of the trading business were implemented by June 30th 2008 and assuming successful disposal of the business by 31 December 2008, the Group expects to improve its balance sheet considerably, with the elimination of about US$140 million trading-related debt and banking facilities and improvement to cash flow by about US$50 million as a result.

Titan says it will continue to invest in its shipyard and storage businesses. Titan Quanzhou Shipyard, which is wholly-owned by Titan, is expected to deliver 10 new built vessels this financial year. The construction of its ship repair yard (which is designed to have ship repair capacity of 240 ships per year after completion) is progressing rapidly.

Titan expects that the onshore storage facilities in which it has invested, will have combined up to 1.2 million cubic meters of oil and chemical storage capacity in China by the end of 2008. This is to include 180,000 cubic meters of fuel oil storage and 125,300 cubic meters of chemical storage amounting to a total 305,300 cubic meters of new capacity at Nansha Terminal Phase II due for completion this year, and 420,000 cubic meters of fuel oil storage capacity at Yangshan Terminal Phase I planned to be ready for operations by the third quarter this year.

Nansha Terminal Phase I has been designated by the Shanghai Futures Exchange in March 2008 as a physical delivery storage facility for the settlement of its fuel oil contracts. Titan has also been in active support of efforts to establish the Hong Kong Mercantile Exchange (“HKMEx”) and, in addition to its interest in being an investor in HKMEx, it also proposes to provide delivery support of fuel oil contracts through its bonded storage facilities in Mainland China.