PETALING JAYA: The operating landscape this year for the petrochemicals industry is likely to remain challenging, says Petronas Chemicals Group Bhd
(PetChem).
In its recently relased 2025 annual report, the integrated chemical producer said globally, the chemical industry is still facing economic uncertainty, oil price volatility and evolving market conditions.
“Together with heightened geo-economic and trade tensions, the group expects the olefins and derivatives (O&D) market to remain under pressure due to new capacity additions in China and subdued demand,” the group said.
It also noted prolonged supply from North-East Asia and the Middle East have also weighed on market access, prices and margins.
For its different segments, O&D saw a softer performance due to lower average product prices on the back of weak downstream demand and ongoing geoeconomic tensions as well as lower sales volumes.
On top of that, the segment was further impacted by the strengthening of the ringgit against the US dollar and higher unrealised foreign-exchange losses from the revaluation of payables, lower finance income due to timing adjustments to trade payable payments,
Higher depreciation and finance costs at Pengerang Petrochemical Company Sdn. Bhd or PPCSB also affected the segment.
PetChem added, in contrast, steady and robust agricultural demand from India and Australia has continued to support fertiliser consumption, while methanol supply is expected to remain tight amid scheduled turnarounds in South-East Asia.
For its specialities segment, its portfolio registered a weaker performance on the back of volatile market conditions, persistent pricing pressure and widening regional disparities.
“Oversupply from Asia‑Pacific maintained competitive intensity and depressed prices, with the impact amplified by trade tensions and tariff uncertainties,” PetChem noted.
With that, the group said it maintains a cautious outlook on the back of ongoing softness in the construction and automotive end-markets, with only modest growth observed in consumer‑related sectors.
Meanwhile, PetChem posted a net loss of RM2.1bil for its financial year ended Dec 31, 2025 (FY25), a stark contrast to a net profit of RM1.17bil a year ago.
The drop in profit primarily reflected a lower earnings before interest, tax, depreciation and amortisation (Ebitda) asset impairments at Perstorp and lower finance income from timing adjustments to trade payable payments.
Its revenue for the period under review was also lower by 10% at RM27.48bil compared to RM30.67bil a year earlier. For 2026, the group said it will continue to enhance its portfolio resilience.
Part of its strategies will include leveraging its strength in asset optimisation, remaining cost competitive while focusing on operational efficiency.
“Our core business will remain a priority, anchored by safe and reliable operations, disciplined capital allocation and sustained efficiency to protect margins and cash flow through the cycle,” it said.
Chief executive officer Mazuin Ismail said the group had navigated a complex mix of external and internal challenges that required continuous recalibration to sustain performance and delivery.
“With unplanned disruptions occurring alongside the scheduled programme, we undertook a full‑year operational review and made the decision to defer the major portion of our turnaround activities to this year to safeguard operational and business continuity. Despite the challenging environment, we maintained stable operations.”
