Petrochemical business may be hit with limited hit from Malaysia's new lockdown

Malaysia will be under a two-week nationwide lockdown from June 1, but petrochemical production will continue and, given its classification as an essential industry, is likely to experience no major disruption
.

For some local downstream plastics manufacturers, however, the lockdown could create a manpower shortage
.

The lockdown was announced on May 28 after a sharp rise in new coronavirus cases in the country, allowing only essential economic sectors and services to operate
.

Malaysian Prime Minister Muhyiddin Yassin said: "This decision was made after taking into account the current situation of the Covid-19 outbreak in Malaysia, with daily confirmed cases exceeding 8,000 and suspected cases exceeding 70,000
.
"

The country reported five consecutive days of record increases in coronavirus cases, with overall infections exceeding 565,500 and 2,729 deaths as of May 30, according to the health ministry
.

Ahead of the total lockdown, the government had already started tightening restrictions under the nationwide Movement Control Order (MCO) or MCO 3.
0, which started on May 12 and will last until June 7
.

In January this year, the Malaysian government implemented the second two-week MCO (MCO 2.
0) in six Malaysian states as the number of Covid-19 cases increased
.

In the new lockdown, the manufacture of medical equipment, textiles for the production of personal protective equipment and oil and gas, including petrochemicals, is allowed to continue
.

"The manufacturing and manufacturing-related services sectors that are permitted to operate are to ensure minimal disruption to the supply chain of critical components and finished goods," the Ministry of International Trade and Industry said in a statement
.

Petrochemical production units of state-owned Petronas Petronas (PETRONAS) are expected to remain operational during the lockdown
.

Base oil production at the company's refinery in Melaka will continue to run, according to a person familiar with the company
.

Customer factories will also continue to operate, the sources said
.

Ineos Petronas Acetyls' 535,000 t/y acetic acid plant in Kerteh will also continue to operate
.

According to the sources, ethanolamine production at PETRONAS continues to run at full capacity, and production of butyl acetate and propylene is also unaffected
.

For methyl tertiary butyl ether (MTBE), the company maintained its June and July delivery schedule
.

Malaysia's Idemitsu SM is still in the process of shutting down its 240,000 t/yr SM unit by the end of the week, but its restart could be delayed if there is a manpower shortage
.

While Malaysia's PE and polymer plants will continue to operate during the lockdown, manpower at two downstream plastics plants will be cut to 60%, the sources said
.