PetChem MD: US-China trade war may impact firm

KUALA LUMPUR: Integrated chemicals producer Petronas Chemicals Group Bhd (PetChem) could be impacted if the trade war between the United States (US) and China continues to worsen, according to the group’s managing director and chief executive officer Datuk Sazali Hamzah.

Speaking after the 2018 Asia Petrochemical Industry Conference, Sazali said that the escalation of trade hostilities in the longer term may lead towards lower industrial growth in China and eventually affect the petrochemicals industry in the region, including PetChem.

However, he added that the group has not been affected by the trade war for now.

“At the moment, there is no serious threat and it is still business as usual for us. Currently, we are closely monitoring the trade war between the US and China. So far, our customers in China are still actively pursuing strategic collaboration with us.

“Effects from the trade war could impact our whole region.

“However, we believe the industry will normalise at the end, but it remains to be seen how long will it take to do so,” added Sazali.

Currently, China represents about 16% of PetChem’s sales volume. Sazali indicated that sales into China could increase to about 18% to 20% over the long run, given the higher demand in the country.

Meanwhile, the South-East Asia region remains PetChem’s dominant market to date.

When asked about the status of the Refinery and Petrochemical Integrated Development (Rapid) project in Pengerang, Johor, Sazali pointed out that the project is on track for start-up in 2019.

“Moving forward, we are looking at what we can do at further downstream to diversify and grow our business.

We still have a lot of opportunities in this area.

“So, we are not only focusing on the upstream segment, but we will also focus more on the downstream business,” he said.

Sazali also added that PetChem’s total production capacity is expected to increase to 14.6 million tonnes from 12.7 million tonnes after the completion of the Pengerang Integrated Complex (PIC) in Johor.

With an investment of US$27bil, PIC consists of the Rapid project and six other associated facilities.

PIC is designed to produce premium differentiated petrochemicals to meet domestic demand for petroleum products, apart from fulfiling the Government’s requirements on the implementation of Euro 5 fuel standard.