Kuala lumpur: The Malaysian Plastics Manufacturers Association (MPMA) anticipates ongoing volatility in the nation's plastics manufacturing industry due to the ongoing West Asia crisis. Cheah Chee Chon, the president of MPMA, highlighted that persistent increases in oil prices, coupled with supply disruptions, are expected to further constrain refinery output of critical intermediates such as aromatics and other chemical precursors.
According to BERNAMA News Agency, Cheah explained that this situation will reduce the availability of feedstocks for resin production, intensifying existing supply shortages and cost pressures. Consequently, plastic manufacturers are likely to experience continued production delays and margin compression. Cheah emphasized that even if the conflict de-escalates, recovery will not be immediate, as rebuilding essential infrastructure and stabilizing production will require significant time.
The impact of these disruptions extends across crucial sectors, including food and beverage packaging, pharmaceuticals, and electrical and electronics (EandE). The resulting shortages of essential goods, rising costs, and downstream inflationary pressures are expected to affect the overall cost of living. Cheah noted that the price of raw materials, particularly resin, has surged from approximately US$800-US$900 per tonne to over US$1,500 per tonne, with additional supplier surcharges of up to US$250 per tonne. Certain resin grades have even exceeded US$2,000 per tonne, representing increases of over 100 percent.
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, Lotte Chemical Titan Holding Bhd and Petronas Chemicals Group Bhd, are grappling with significant 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.
In a note, MBSB Investment Bank Bhd pointed out that the crisis also impacts the invisible components of the pharmaceutical industry, such as aluminium and plastics. Approximately 9.0 percent of global aluminium comes from the Middle East, and shortages of these elements could affect the production of blister packs that house most generic drugs. The sterilization processes of packaging, which use petrochemical gases, are also tied to crude oil. With oil and gas production and distribution disrupted by the US-Iran war, the potential for lower packaging production and price hikes of containers is high, leading drug producers to increase the cost of limited finished pharmaceutical products.