PETALING JAYA: The month-long unplanned methanol plant shutdown could negatively impact PETRONAS Chemical Group Bhd’s (PetChem) financial performance for the third quarter of its current financial year (3Q23).
TA Research, in a report on the chemical group, stated it understood that PetChem’s PC Methanol (Plant 2) in Labuan experienced a mechanical failure and had an unplanned shutdown of around one month in 3Q23.“We expect plant utilisation in the fertiliser and methanol (F&M) segment in 3Q23 to be similar as previous quarters (1Q23: 97.2%, 2Q23: 73%).
“Overall, the full-year utilisation rate is expected to fall below 90%, mainly dragged by the decrease in utilisation rate in the F&M segment,” the research house noted.
Adding to the negative outlook for the company is the subdued pricing of chemicals in the quarter, the research house added.
Ethylene and monoethylene glycol average selling prices (ASP) were 5.2% and 3.3% lower quarter-on-quarter (q-o-q) respectively due to subdued demand, while ASP of methanol was 5.3% lower due to higher inventories.
That said, urea was 15.9% higher q-o-q, driven by export restrictions in China but specialty chemicals were mixed, with some segments such as automotive showing strong momentum.
The shutdown of the methanol plant has led TA Research to lower its utilisation rate assumption for PetChem’s F&M segment in FY23 to 85% from 90% previously and decrease its ASP assumptions for FY23 to FY25.
“Following these changes, we trim our FY23, FY24 and FY25 earnings forecasts by 11%, 8.1% and 0.6% respectively,” the research house said.
Furthermore, the research house said the commissioning of PetChem’s facilities in Pengerang continues to incur losses, adding however that the losses are likely to narrow in the coming quarters as production ramps up.
TA Research expects PetChem’s Pengerang plants to be commercially operational only next year. The commissioning of Pegerang remains loss making with a loss before interest, tax, depreciation and amortisation of RM70mil in 2Q23 as compared to a RM100mil loss in 1Q23.
