Global Processing

Taiwan's petrochemical industry to see output rise in Q4

November 26, 2012

TAIPEI, Taiwan — Taiwan''s petrochemical sector is predicted to grow over the last three months of the year. A government report expects a 7.6 percent rise in output compared to the third quarter of 2012, with increasing demand fueled by major economies getting back on the path to growth, the Taipei Times website has reported.

Still, the overall petrochemical industry output for 2012 is expected to drop 4.7 percent from the total 2011 values, mostly due to the economic instability that has shaped global markets this year, according to the report, which was released by the Industry and Technology Intelligence Services (ITIS), an organization governed by the Ministry of Economic Affairs.

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It estimates that the overall annual output of the petrochemical industry will fall to NT$1.83 trillion, compared to NT$1.92 trillion recorded in 2011. However, the output for the final quarter will amount to NT$462.2 billion ($15.83 billion), a rise from NT$429.5 billion in the same period last year.

The positive expectations for the final quarter stem from a series of stimulus packages put in place by several major countries, including China, which has launched a scheme to provide funding to the market in a bid to stimulate it, and the United States, which started a third wave of quantitative easing, trying to boost the economy, the report points out. Furthermore, optimism is backed by the relative leveling out of crude oil prices globally during the final quarter, which contributes to increased margins for international petrochemical producers and encourages shipments, the ITIS added.

The institute goes further in analyzing the positive influences on the sector by noting that CPC Corporation, a state-owned petroleum and natural gas company in Taiwan which is the core of the Taiwanese petrochemical industry, has boosted its production of propylene thanks to the launch of its residue fluidized catalytic cracking plant. This will be reflected in the petrochemical output during the final quarter.

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Still, it is not all good news, the ITIS explained. Although to a smaller extent, Taiwan has felt the impact of the eurozone''s debt problems on its economy and this, combined with increasing competition from a number of emerging economies, has affected production capacity. As a result, the annual petrochemical output is predicted to lag behind last year''s readings. The report warned that those factors are still not eliminated but the implemented stimulus measures could help balance their impact.

Meanwhile, Taiwan''s petrochemical output declined by 4.1 percent in the third quarter to NT$429.5 billion compared to the previous three-month period, due to CPC Corporation suspending some of its production and because another industry major, Formosa Plastics Group, had its scheduled annual maintenance taking place, the report noted.

The third quarter saw the output of petrochemical raw material drop by 8.6 percent from the previous quarter to NT$264.6 billion and output of the artificial rubber sector went down 12.2 percent to NT$13 billion, whereas artificial resin and plastics output for the period increased by 4.5 percent, reaching NT$151.8 billion, the report said.