Sarawak plastic makers hit by unstable supply, cost hike

KUCHING (March 15): Ongoing tensions in the Middle East have disrupted global petrochemical supply chain, with the Sarawak branch of the Malaysian Plastics Manufacturers Association (MPMA) warning that local plastic manufacturers are facing unstable raw material supplies and sharply rising costs, with some companies potentially forced to halt production.

Malaysian Plastics Manufacturers Association Sarawak branch chairman Eddie Oon said geopolitical tensions have significantly impacted the global raw materials market, particularly the supply of critical chemical additives required by the plastics industry.

He explained that the disruption has prevented these additives from arriving in Malaysia, affecting the local virgin plastic resin production chain.

“Companies producing virgin resin (the purest form of plastic material) in Malaysia are facing difficulties maintaining normal production due to the shortage of these essential additives.

“When upstream raw material supply is affected, local plastic product manufacturers naturally face the problem of having no materials to produce with,” he said when contacted by The Borneo Post.

Oon revealed that the supply of plastic raw materials has been severely impacted, with prices having surged by more than 50 per cent.

This has placed significant cost pressure on local plastic product manufacturers, and industry players are concerned that the market may not be able to fully absorb the rising costs.

He warned that if the conflict continues or escalates, the issue will go beyond rising prices.

“If the situation worsens, there may be no additives available. At that point, even if manufacturers have machines and orders, they will not be able to produce and may be forced to stop operations,” he affirmed.

Oon added that some members have already informed him that if the situation continues, certain factories may have to suspend production after April 1.

He noted that many consumers may not understand why Malaysia, as an oil-producing country, could still face a shortage of plastic raw materials.

He said although Malaysia produces oil and petrochemical products, the plastic manufacturing process requires various specialised chemical additives, many of which are imported.

If the supply chain is disrupted, the entire production process will be affected.

He also pointed out that the global raw materials market is currently experiencing high levels of uncertainty and volatility, with supply chains and logistics facing disruptions.

Several key maritime trade routes have also been affected, including some shipping lanes passing through the Strait of Hormuz.

“Any disruption there can have a chain reaction on raw material supply for the plastics manufacturing industry,” he said.

Oon said that despite industry players’ efforts to maintain their existing long-term supply commitments, the instability in raw material supply, market volatility and mounting logistics challenges may make it difficult for some companies to continue fulfilling their supply arrangements.

“In unavoidable circumstances, some manufacturers may have to temporarily suspend supply until the supply environment stabilises enough to ensure reliable deliveries in the future,” he said.

He added that the industry is closely monitoring developments and actively exploring alternative raw material sources and supply channels in order to minimise the impact on customers and the market.

“We understand this may affect customers’ production plans and operations, but the industry is doing everything possible to restore normal supply as soon as possible,” he added.