Malaysia’s Plastics Assn. reassures local industry over loss of Polypropylene

21-Jan-13

Malaysia’s Plastics Manufacturers Association (MPMA) reached out to its members this month to reassure them that supply would be available in the country once Petronas Chemicals Group (PCG) mothballs the PP plant in Kuantan, Malaysia belonging to its subsidiary Polypropylene Malaysia, as per the pricing service of ChemOrbis. A source from Polypropylene Malaysia had reported last month that the company would mothball its 80,000 tpa PP plant at the end of December because of unfavorable operating economics. MPMA noted in a letter last week to its members that it had met with representatives of PCG to discuss PP supply issues and were notified that the company would supply customers’ requirements up until January of this year but on a case by case basis. MPMA also noted in its letter that PCG would resume PP production in 2017 with a larger capacity of 600,000 tpa as part of its Refinery and Petrochemical Integrated Development (RAPID) project being developed in Pengerang, Johor. Earlier in January, MPMA also arranged meetings with Lotte Chemicals Titan who promised to give strong support to the local plastics industry, according to the Association’s letter. Lotte Chemicals Titan was formerly known as Titan Petchem (M) Sdn Bhd, but had a formal name change at the start of this year. South Korea’s Lotte Group is the parent company of Honam Petrochemical, who had acquired Titan in 2010. In the letter it was noted that Lotte Chemicals Titan’s Malaysia plant has a capacity of 400,000 tpa and can produce 21 grades of homo-PP and 20 grades of copolymer PP. Lotte Chemicals Titan also pointed out that the total production capacity of PP in the ASEAN region is around 4.28 million tpa. There is a surplus of PP supply in the region of around 1.6 million tpa and that this surplus figure is four times the total demand in Malaysia. Furthermore, the company noted that imports from other ASEAN countries are duty free. Looking at local PP prices in the region, prices in Malaysia have been consistently above those in Vietnam for the past six months, as per ChemOrbis. They have generally been below those in Thailand with a few exceptions and have been mainly below Indonesia, except for a spike near the end of 2012 and again recently when they reached nearly on par status as of last week.