Price of LLDPE to rise in Malaysia-processors expected to absorb higher cost

27-Aug-09

The Malaysian Plastic Manufacturers Association (MPMA) expects a 5% increase in the price of linear low-density polyethylene (LLDPE) next month. As the processors were expected to absorb much of the higher raw material cost, it could result in a demand slow down and affect the margins. As a result, Q2 results of MPMA members is estimated to improve as compared to Q1 due to the increase in demand, but not record a significant improvement due to higher costs. The forecast for the collective revenue of MPMA’s 1,450 members in 2009 was estimated at RM14bil, down by about 12% from 2008. LLDPE prices were at levels of US$900/ton in January, and are currently at US$1300/ton. IN Q1, the plastic industry in the country generated about RM3bil in sales, compared with RM2bil in the previous corresponding period, due to the global slowdown. Overseas demand from USA, Europe and Japan, continued to remain weak on cautious consumer spending. A slow and uncertain recovery is expected in 2010 and 2011. LLDPE demand in Malaysia this year was expected at about 250,000 tons as against the country’s production capacity at 80,000 tons. HDPE demand for 2009 is estimated at around 700,000 tons, while the production capacity is about 500,000 tons.