MALAYSIA: Plastic product makers see strong domestic and overseas orders

Meanwhile, engineering plastic product manufacturers, faced with a weakened consumer electronic market especially in the audiovisual segment, are turning to the automotive and power tool industries to look for fresh opportunities.

Plastic packaging material manufacturer SLP Resources Bhd expects 2013 to be even better than 2012. Group managing director Kelvin Khaw said it had so far obtained orders up until the third quarter.

"For the first half of this year, the group's orders have a value of over RM30 million. A lot of these orders are from food and beverage manufacturing companies which require packaging materials for the forthcoming Hari Raya celebrations in August.

"Last year was good but 2013 is expected to be even better, making it the best year for the group since it was incorporated in 2006,” he said.

Khaw said the group was in the process of installing a new RM5.5 million production line for its Kulim plant that would increase annual output of packaging materials to about 30,000 tonnes this year.

"About 20% to 30% of the packaging materials to be produced are in the thin-gauge category, ranging from six to 20 microns in thickness, which are becoming increasingly popular.

"Thin-gauge plastic materials are more cost-effective to produce as they require less raw material. In terms of quality, they are as strong and durable as the thicker gauge plastic material,” he added.

However, Khaw said that the first quarter of 2013 was slightly slower than the previous year's corresponding period.

"Orders picked up in the second quarter. The challenge for us this year is the rising cost of production due to the implementation of minimum wages, which will erode our bottom line. We expect to pass some of the costs to the customers,” he said.

Plastic resin prices are now hovering at US$1,500 per tonne compared with US$1,400 about two weeks ago.

"The rise in prices probably has to do with the pick up of demand from China after its manufacturing sector took a break to celebrate the May 1 Labour Day holiday,” he said.

Khaw said contribution from the domestic market to revenue would remain at about 50% this year, although the plan was to reduce dependency on the local market by 2016.

"By 2016, the plan is to bring down the domestic contribution to 30% and increase the overseas contribution to 70%,” he added.

Cepco Trading Sdn Bhd is also expecting the food and beverage sector to drive its growth. Its director Jansen Lim said that for the first half of 2013, the company expected to see a strong single-digit growth in the orders for its high-impact polystyrene, polypropylene, and polyethylene terephthalate packaging materials compared with the same period a year ago.

"These orders are coming from food and beverage manufacturing companies in the country that require plastic trays for food packaging, which generate about 40% of Cepco's revenue,” he said.

On the company's electronic business, Lim said orders for its acrylonitrile-butadiene-styrene and engineering plastic resin used in the semiconductor and electronics industries were still flat for the first six months of 2013 compared with the same period last year.

"We hope to see a pick up in this segment in the third quarter,” he added.

Meanwhile, due to the slowdown in demand for audiovisual consumer electronic products, Prestige Dynamics Sdn Bhd is looking at the automotive and power tool business to drive growth this year.

"So far, we have secured over RM20 million worth of orders for 2013, which is more than half of our revenue for 2012.

"These orders are for the casing used in global-positioning system device used in trucks and light-emitting diodes light guides for the US automotive market, sun-roof system used in passenger cars for European customers, and the two-component moulded enclosures, made of two types of plastic raw materials, for power tools.

"Both the automotive and power tool business contributes about 50% of the group's revenue,” a company official said.

Prestige Dynamics is investing around RM15 milionl in a second plant in Seberang Prai.

"The RM15  million facility, with 30,000 sq ft of built-up area on a three-acre site, should be operational by the end of 2013 or early 2014. It will have a clean room to produce plastic parts for medical devices,” he said.

Source: Daily "The Star", Kuala Lumpur; 27 May 2013

(Syed Rashid Ali, Karachi, Pakistan)