Petronas has taken a drastic step to shut down and close a number of petrochemical factories around Malaysia, its country of origin, as the demand of polymers and chemical materials weakens.
Several of Petronas petrochemical plants in Kerteh (Terengganu) and Gebeng (Pahang) had been shut down for indefinite period.
The plants were mainly involved in the production of polyethylene, which is commonly used in the manufacturing of plastic packaging, food wrappings as well as parts for vehicles and the automotive industry.
Some of Petronas factories in Gebeng, Pahang operate through partnership with BASF Group, currently the world’s largest chemical company. Recently, BASF, a German company, announced its plan to shut down 80 of its plants worldwide, including those in Malaysia.
Lack of orders from its customers caused the inventories to pile up and the company decides to halt the material production while watching the market reaction. A big bulk of orders for chemical material from Petronas plants come from the US and Europe, and as the US financial crisis and the credit crunch are hitting hard, many companies are closing down business, or stopping operation in order to stay afloat.