CHEMICAL Company of Malaysia Bhd (CCM) targets to reap this year the benefits from two projects put off from 2019 – a caustic soda supply contract to Petronas’ Refinery and Petrochemical Integrated Development (RAPID) facilities and capacity expansion to meet the growing demand for chlor-alkali products.
It said the deal to supply up to 351,000 metric tonnes (MT) of caustic soda to the national oil company was expected to take off in the second half of this year. A fire incident at the RAPID site in April 2019 put paid to its plan to carry out the supply last year after securing the three-plus-one-year contract from Petronas.
CCM also expects its chlor-alkali plant Pasir Gudang Works 1 (PGW1) facility to run at full capacity by early 2021. The facility was supposed to be reactivated in the third quarter of last year but only began testing and commissioning in December due to stringent requirements imposed by the authorities.
“As we move forward into financial year 2020, we expect to reap the benefits of the caustic soda supply contract to Petronas’ RAPID facilities. We plan to leverage on this contract to maximise the group’s trading opportunities,” group managing director Nik Fazila Nik Mohamed Shihabuddin said in the report.
Currently, Malaysia produces over 300,000 MT of caustic soda per annum with CCM contributing some 120,000 MT to 144,000 MT per annum towards this total. Although there is rising local market demand for caustic soda, the players in the domestic market cannot fulfil this demand.
“As such there is a need to import caustic soda. We are in a position to do this in an effective manner given our experience and vast network of connections,” she said, adding that CCM targeted to increase its caustic soda market share from 40% now to 50% in the near future.
CCM, she said, had set its sights on catering to the core industries such as the oleochemicals, petrochemicals, water treatment plant and rubber glove industries.
“As manufacturers from China begin to look increasingly at Malaysia to set up their base of operations, they will require caustic soda as a fundamental ingredient in their production process,” she said.
“With PGW1 running at full capacity by early 2021, we will continue to reinforce CCM’s position as a reputable supplier to industrial customers in the southern region by leveraging on the proximity and convenience that the plant offers its southern customers.”
On the regional front, CCM was looking to grow its chlor-alkali products volume for Singapore as well as chlorine volumes for Indonesia and Brunei, she said.
“Within Indonesia, we have expanded to Surabaya and are exploring chlorine and calcium nitrate opportunities in Medan. Last year, we undertook the sale of some 1,500 MT of chlorine to Indonesia and are confident of making bigger inroads there,” she said.
CCM will also intensify efforts to diversify its product portfolio by exploring opportunities on the chlorine or caustic soda derivatives fronts.
“On the trading side, we have some new product offerings by way of soda ash, caustic flakes and others which are the common commodity chemicals used by our current customers. We are looking to add value to our customers by offering them a wider range of products.”
At the same time, CCM would also grow its share in the calcium nitrate segment so that rubber glove players would look increasingly to it to supply their needs, said Nik Fazila.
As for the price outlook, she said chlor-alkali prices were expected to remain bearish and put a downward pressure on CCM’s margins amid the softening of the global economy as a result of the ongoing US-China trade dispute, the weakening oil prices and the prolonged impact of the Covid-19 pandemic.
However, according to Nik Fazila, CCM plans to cushion it by maximising its production and being cost-efficient.
At the same time, under the portfolio diversification strategy, CCM will continue to explore strategic ventures by way of chlorine derivatives and specialised solutions.
“In line with our growth aspirations, we will continue to be on the lookout for attractive investment opportunities domestically and regionally to complement our existing business portfolio,” said Nik Fazila.
CCM recorded a lower net profit of RM16.02 mil for the financial year ended Dec 31, 2019 (FY19), compared with RM25.70 mil in FY18. Revenue also decreased to RM386.06 mil from RM395.94 mil previously. – May 15, 2020, Bernama
