KUALA LUMPUR (April 21): Petronas Chemicals Group Bhd (PetChem) expects the volatility in feedstock prices caused by the Russian-Ukraine conflict to moderate in the near term.

"As you can see what the conflict does is that it has created some instability in the feedstock prices, especially gas. In the first quarter [of 2021], the products derived from gas, for example urea, [saw their prices skyrocket].

"So we believe that the situation would be temporary… while we are benefitting from the situation currently, we do not think that the situation will be a norm and would stabilise over a period," PetChem's managing director (MD) and chief executive officer, Mohd Yusri Mohamed Yusof, said at the group's annual general meeting (AGM) on Thursday (April 21).

Yusri also said that the group believes that China — a 16% revenue contributor in 2021 according to its 2021 annual report — will continue to remain as its key market in 2022 amid a potential economic slowdown in the most populous country in the world due to the pandemic.

"We expect China's economic growth to be around 8% or so. We believe that the demand is still going to be there. If you talk from the perspective of the Covid-19 lockdowns that are happening [in China] now, we are managing that through distributing to other ports and also to channel some of the products to other areas that are not affected," Yusri highlighted.

All resolutions presented at the AGM were also approved by its shareholders.

Meanwhile, Yusri said that PetChem has identified and is working diligently on several targets for mergers and acquisition in 2022 and the petrochemicals group expects to make announcements upon confirmation.

Separately in a statement, PetChem said it has strengthened its growth prospects and presence in the Southeast Asian region as a key silicone manufacturer through its 2019-acquired wholly-owned subsidiary, BRB international, which began operating its new 8,000 metric tonnes annual capacity silicone blending facility in Gebeng, Pahang in December 2021.

"Additionally, PetChem recently achieved final investment decision to build a melamine plant in Gurun, Kedah, potentially making PetChem the sole melamine producer in Southeast Asia.

"Our Pengerang Integrated Complex (PIC), which is now in the final stages of start-up readiness, provides another platform to strengthen our position in both basic and specialty chemicals. We expect to commence start-up in the second quarter of 2022. With PIC, we will increase our production capacity from 12.8 million up to 14.6 million tonne per annum," Yusri highlighted in the statement.

At the time of writing, PetChem shares were trading 12 sen or 1.17% higher at RM10.42 apiece, valuing the petrochemicals group at RM83.36 billion. Year to date, the counter has appreciated by RM1.66 or 18.95% from RM8.76.