Chemical and polyester producer, PT Polychem Indonesia Tbk (ADMG) admits that the business challenges this year are quite tough considering that world crude oil prices have soared. As a result, the company temporarily stopped its polyester factory in Karawang, West Java. The increase in world oil prices has been going on since the beginning of this year. Quoting Bloomberg, today (27/6), the price of WTI oil has touched the level of US$ 107.90 per barrel while Brent oil is at the level of US$ 113.78 per barrel. In previous news, ADMG had stopped the production of the polyester factory in Karawang at the end of March.
Yendrizal, Corporate Secretary of Polychem Indonesia, confirmed that until now his party is still deactivating the polyester factory and has not given certainty when the factory will operate again. "Until now the factory in Karawang has not started. We are still looking at the development of market conditions first," he said in a public presentation, Monday (27/6).
ADMG's business is strongly influenced by the dynamics of global crude oil prices. The increase in oil prices cannot be separated from the accumulated effects of the Russia-Ukraine conflict and the Covid-19 pandemic. The existence of a pandemic has also caused demand in the upstream chemical and polyester sectors to tend to fall.
Citing its official website, ADMG's polyester production capacity is 129,600 tons per year consisting of 108,000 tons per year for polymer and 21,600 tons per year for DTY. Polyter itself is one of the raw materials for making textile products.
The cessation of polyester factory production will certainly prevent ADMG from getting sales from this sector. In the first quarter of 2022 alone, the factory's operations seem to have begun to decrease. This is evident from the sales of ADMG polyester in the local market which fell 78% (yoy) to US$ 2.25 million. The company did not even record sales of polyester for the export market in the first three months of 2022.
Yendrizal added that when world oil prices rose, ADMG could not in parallel increase the selling price of its products to customers. For now, the anticipatory step taken by ADMG is to prioritize the sale of products with better profit margins.
"We hope that in the future energy prices can return to normal," he said.
