Expansion of 2-EHA to maximize Petronas Chemicals market share
KUCHING: BASF Petronas Chemicals Sdn Bhd (BPC), a joint venture between BASF and Petronas Chemicals Group Bhd (Petronas Chemicals), intends to increase the annual production capacity of 2-ethylhexanoic acid (2-EHA) by 30 000 to 60,000 metric tonnes in 2024.
According to the Managing Director and CEO of Petronas Chemicals, Datuk Sazali Hamzah, 2-EHA is integral to the growth of BPC and the expansion is planned to capture the growing market.
“The expansion is also in line with PCG’s sustainable growth strategy to expand our portfolio with higher value products.
“By leveraging the existing integration between BPC and other Petronas Chemicals plants at the Kuantan Verbund site, we are able to maximize our value chain by improving the quality and cost competitiveness of our products and continue to provide innovative solutions to our customers, ”he said.
Acting as a chemical intermediate, 2-EHA is used as a compound in the production of synthetic lubricants as well as oil additives.
It is also used in functional fluids such as automotive coolants, metal salts for paint dryers, plasticizers, stabilizers, catalysts and other applications in various industries.
In addition to the Kuantan production site, BASF also produces 2-EHA at its Verbund site in Ludwigshafen, Germany.
MIDF Amanah Investment Bank Bhd (MIDF Research) estimated that the expansion could slightly cushion the impact of the current disruption in the international supply chain for raw materials, thereby improving the recovery in demand for industrial and manufacturing sectors. dependent on petrochemicals, especially the automotive industry.
“We are revising our price target for Petronas Chemicals to RM 8.70 (previously RM 8.03), based on a revised 21-fold higher price-to-earnings ratio (PER), indexed to earnings per share of 41.4 sen for the 2022 financial year.
“We believe the higher PER is justified given the improving economic outlook, which is why we are bringing its PER down to its historical five-year average.
“However, we don’t think it should be higher given the rise in crude oil prices which could affect the price of its input.”
MIDF Research has restored its positive view of Petronas Chemicals, despite the uncertainty of the impact of the Covid-19 pandemic and the possible revision of Opec + crude production in a context of high demand.
“Petronas Gas has proven to benefit immensely from the rise in the prices of polyethylene, urea and methanol products, in the context of the current rise in oil and gas prices,” he added. .
“However, the risk of volatility in crude oil and natural gas prices, as well as the uncertainty of the long-term impact of the pandemic, remains. In addition, we believe that all the positives have been taken into account. “