- 99 - Commodity price risk The Group is exposed to commodity price risk relating to purchases and sales. The Group mitigates risk by closely monitoring market situation, feedstock, and product prices to adjust sales and production plans for our value chain facing rapidly changing situations. Moreover, the Group primarily utilises derivatives and forward to hedge the commodity price and spread fluctuations. Commodity price sensitivity analysis The following table details the Group’s sensitivity to an increase and decrease in commodity price. The sensitivity analysis includes only outstanding commodity derivative contracts at the reporting date and using an increase or decrease rate by considering the reasonably possible change in commodity price. Unit : Million Baht Consolidated financial statements Separate financial statements Increase Decrease Increase Decrease As at December 31, 2021 Net derivatives gain (loss) Petroleum Crack Spread hedging +/- 1 USD per BBL (1,157) 1,157 (1,157) 1,157 Petrochemical Spread hedging +/- 1 USD per Ton (18) 18 (18) 18 As at December 31, 2020 Net derivatives gain (loss) Petroleum Crack Spread hedging +/- 1 USD per BBL (96) 96 (96) 96 Petrochemical Spread hedging +/- 1 USD per Ton (0.4) 0.4 (0.4) 0.4 Credit risk Credit risk is risk of failure from a customer or a counterparty to settle its obligations to the Group as and when they fall due. Management has a policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. At the reporting date, there were no significant credit risk and the concentration of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. However, the majority of the customers are on the long-term contracted commitment and parts of them are the Company’s shareholders which the company has consistently collected from them. For the customers who do not have the long-term contracted commitments, the Group monitors the risk on an ongoing basis and would do the business only with the credible customers by limiting the credit lines and requesting the guarantee on some cases. For the export, the credit of counterparty will be considered. The Group will demand a payment on a case to case basis and also has commercial credit insurance. Management anticipates no material losses from its debt collection. - For trade receivables, the Group apply simplified approach in accordance with TFRS 9 to measure lifetime expected credit loss. The Group consider expected credit loss by using trade receivables provision table which estimate historical credit loss. The overdue circumstance adjusted to reflect current situation of receivables and the future economic conditions were taken into account. Therefore, credit risk of these financial assets is presented by consideration of overdue status in provision by aging table set out in note 6. - The Company has loans to related parties. In assessing credit risk, the Company considers that most of subsidiaries and joint ventures in which have borrowings from the Company have the affordability that payments will be made under the agreements. However, the Company continually monitors the possibility of payments from counterparties. 331 BUSINESS OPERATION AND PERFORMANCE CORPORATE GOVERNANCE FINANCIAL REPORTS AND FINANCIAL STATEMENTS APPENDIX
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