Malaysia's Plastics Manufacturing Industry To Experience Continuous Volatiltiy -- MPMA

By Engku Shariful Azni Engku Ab Latif

KUALA LUMPUR, April 17 (Bernama) -- The Malaysian Plastics Manufacturers Association (MPMA) expects the country’s plastics manufacturing industry to experience continued volatility in the near to medium term amid the West Asia crisis. 

Its president, Cheah Chee Chon, said sustained increases in oil prices, combined with supply disruptions, are expected to further constrain refinery output of key intermediates such as aromatics and other chemical precursors.  

"This will reduce the availability of feedstocks for resin production, thereby intensifying existing supply shortages and cost pressures.  

"As a result, plastic manufacturers are likely to face continued production delays and margin compression," he told Bernama. 

Cheah said that even if the conflict de-escalates, recovery will not be immediate. Rebuilding essential infrastructure, such as refineries, pipelines, and port facilities, as well as stabilising production, will require time.

He noted that the impact extends across critical sectors, including food and beverage packaging, pharmaceuticals, and electrical and electronics (E&E). 

"Disruptions are likely to result in shortages of essential goods, rising costs, and downstream inflationary pressures, ultimately affecting the overall cost of living," said Cheah.

Cheah highlighted that the price of raw materials, specifically resin, has increased from approximately US$800-US$900 (US$1=RM3.95) per tonne to over US$1,500 per tonne, with additional supplier surcharges of up to US$250 per tonne.  

Certain resin grades have exceeded US$2,000 per tonne, representing increases of over 100 per cent, he added. 

"Globally, the West Asia conflict has disrupted the flow of crude oil and petrochemical feedstocks through key routes such as the Strait of Hormuz, constraining upstream supply for resin production. 

"Domestically, Malaysia’s two key producers are facing severe constraints; Lotte Chemical Titan Holding Bhd has issued a potential force majeure notice affecting its supply capability, while Petronas Chemicals Group Bhd is undergoing major maintenance at its Kerteh facility alongside operational challenges in Pengerang.  

"As a result, both imported and locally produced resin supplies are currently very tight," he said.

In a note, MBSB Investment Bank Bhd stated that the crisis also affects the invisible components of the pharmaceutical industry, which include aluminium and plastics. 

It said that about 9.0 per cent of global aluminium comes from the Middle East; therefore, shortages of these two elements could affect the production of blister packs that house most generic drugs. 

Pill bottles are also often made from #5 polypropylene, of which the raw material is derived from propane or naphtha, byproducts of petroleum refining and natural gas production.  

"The sterilisation processes of packaging, which use petrochemical gases, are also tied to crude oil. 

"With the oil and gas production and distribution disrupted by the US-Iran war, the potential of lower packaging production and price hikes of the containers is practically higher, making producers of drugs increase the cost of the limited finished pharmaceutical products," it said.

-- BERNAMA