Malaysia’s CCM Fertilizers will cease operations of its Shah Alam ammonium nitrate manufacturing plant, citing prolonged negative market conditions, reduced demand for AN fertilizers over the last five years and the changes in the area around the plant site. It said these factors no longer provide conditions conducive for fertilizer manufacturing.
CCM said the market outlook for the product is bearish, with major customers comprising the oil palm plantation houses trending down to cheaper fertilizers such as straights and mixtures as the downtrend in prices of Crude Palm Oil (CPO) is worsened by high CPO inventory level, low crude oil and other commodity prices.
The Shah Alam plant commenced in 1966 with a capacity of 240,000 mt. The plant experienced a loss before tax of RM4.3 million in 2014 and the business continued to face challenges in 2015.
The closure is expected to be completed by June 30, 2016, and will impact 230 jobs. The company will take a RM30 million impairment.
The company said there will be no change with respect to the availability of Cock’s Head Brand (CHB) products as manufacturing of urea-based fertilizer will continue at CCMF’s plants in Lahad Datu, Sabah and Bintulu, Sarawak, which have a joint annual capacity of 260,000 mt. The supply for AN based fertilizer will be fulfilled through outsourcing to a third-party manufacturer.
"We wish to assure our customers and suppliers that despite the closure of the Shah Alam plant, there will be no disruption of supplies in the market. There is an adequate stock of CHB products and a transition into third party manufacturing has already commenced. We will continue our trading business and serve all commitments made to our customers," said CCM Fertilizers in a statement.