KUALA LUMPUR (Feb 24): PETRONAS Chemicals Group Bhd (KL:PCHEM) extended its decline on Tuesday and analysts scrambled to cut their outlook after the company sank deeper than expected into the red.
The results underscore the downcycle in the industry plagued by persistent oversupply and weak demand. PETRONAS Chemicals still faces near-term headwinds, analysts said, even as some predict that the state-owned company may return to the black this year.
“We believe that the oversupply issue would still persist as more plants are being built, aggressively adding up to active capacities, especially in China,” said Maybank Investment Bank and kept its 'sell' recommendation.
PETRONAS Chemicals fell as much as 20 sen or a little over 6% to RM3.09 on Tuesda, before closing at RM3.10 after nearly 19 million shares changed hands. At the last price, the company had a market capitalisation of RM24.8 billion.
There are now 11 'sell', six 'hold', and four 'buy' calls. The consensus target price is now RM3.06, based on the average of 21 research houses tracked by Bloomberg.
Shares of PETRONAS Chemicals have lost more than 14% of their value since the start of 2026, adding to last year’s woes amid persistent losses at the company that manufactures olefins, polymers, fertilisers, methanol, and specialty chemicals as product prices fell across the industry.
In response, China and South Korea have initiated measures to rationalise production capacity though the effects on output and prices remain to be seen.
Despite the ongoing supply-demand imbalance, additional capacities remain on track to come on-line in China, said Hong Leong Investment Bank, which expects PETRONAS Chemicals to post another net loss this year.
“We expect the petrochemical sector to remain challenging on the back of China’s aggressive capacity expansion drive, coupled with unexciting demand outlook from the downstream sectors,” the research house added.