Taiwan Petrochemicals Report 2012
Taiwan’s petrochemicals industry has been faced with a series of setbacks, including project cancellations and the shuttering of facilities over safety fears, which are eroding its capacity to compete with China for investment and markets, according to BMI’s latest Taiwan Petrochemicals Report. The abandoning of Kuokuang Petrochemical Technology’s Chang-hua complex and the closure of Formosa Plastics’ complex in Mailiao following a series of accidents has prompted a radical downward adjustment in Taiwan’s production and export forecasts. As a result of the closure of the Mailiao complex, which includes Formosa Plastics’ No. 1 cracker, BMI has reduced Taiwan’s forecast available capacity in 2012 from 4.15mn tpa to 2.45mn tpa. By end-2011, of Formosa’s olefin facilities, only the 1.2mn tpa ethylene cracker No. 3, was still running. The 1mn tpa No. 2 cracker was taken offline in March 2011 due to a major fire. We are optimistic that Formosa will reopen its Mailiao complex by 2013, following investment in improved safety. However, Formosa’s poor safety record and ageing plants threaten to undermine growth in Taiwan’s petrochemicals industry, particularly given the global role of its subsidiaries in PVC, EG and PTA.
The government had previously said that without the Kuokuang project, which would provide 1.2mn tpa ethylene, the nation would face ethylene shortages by 2015, when the fifth naphtha cracker in Greater Kaohsiung’s Nanzih District is closed. Kuokuang had aimed at replacing 500,000tpa of ethylene capacity.
BMI forecasts available capacity of 4.0mn tpa by 2016, a slight reduction from the peak of 4.12mn tpa in 2008. This is a radical reduction from the 6.15mn tpa we previously forecast on the basis of the completion of the Kuokuang project and will severely limit the competitiveness of the Taiwanese petrochemicals industry. Even before the Kuokuang project was cancelled, BMI raised concerns over the lack of PE, PP, PVC and PS expansion further downstream, which demonstrates a lack of confidence in Taiwan’s ability to compete in what will be an increasingly competitive environment.
Over the long-term, there is a worrying trend for Taiwanese petrochemicals producers to move investment in basic chemicals to mainland China. Plans by four former Kuokuang project backers to invest in a US$15bn refinery and petrochemical complex in Fujian Province, China, demonstrate the trend among Taiwanese companies to abandon Taiwan in favour of the mainland. Growing economic ties between Taiwan and China are providing further encouragement. Unless Taiwan can diversify and specialise to add value to the olefins production it currently possesses, the industry is likely to fall behind and lose its competitive edge. The aborted Kuokuang project not only removes opportunity for production of commodity chemicals, it undermines many downstream activities.
The government had previously said that without the Kuokuang project, which would provide 1.2mn tpa ethylene, the nation would face ethylene shortages by 2015, when the fifth naphtha cracker in Greater Kaohsiung’s Nanzih District is closed. Kuokuang had aimed at replacing 500,000tpa of ethylene capacity.
BMI forecasts available capacity of 4.0mn tpa by 2016, a slight reduction from the peak of 4.12mn tpa in 2008. This is a radical reduction from the 6.15mn tpa we previously forecast on the basis of the completion of the Kuokuang project and will severely limit the competitiveness of the Taiwanese petrochemicals industry. Even before the Kuokuang project was cancelled, BMI raised concerns over the lack of PE, PP, PVC and PS expansion further downstream, which demonstrates a lack of confidence in Taiwan’s ability to compete in what will be an increasingly competitive environment.
Over the long-term, there is a worrying trend for Taiwanese petrochemicals producers to move investment in basic chemicals to mainland China. Plans by four former Kuokuang project backers to invest in a US$15bn refinery and petrochemical complex in Fujian Province, China, demonstrate the trend among Taiwanese companies to abandon Taiwan in favour of the mainland. Growing economic ties between Taiwan and China are providing further encouragement. Unless Taiwan can diversify and specialise to add value to the olefins production it currently possesses, the industry is likely to fall behind and lose its competitive edge. The aborted Kuokuang project not only removes opportunity for production of commodity chemicals, it undermines many downstream activities.
Contents
Executive SummarySWOT Analysis
Taiwan Petrochemicals Industry SWOT
Taiwan Political SWOT
Taiwan Economic SWOT
Taiwan Business Environment SWOT
Global Petrochemicals Overview
Petrochemicals Market Overview
Table: World Ethylene Production By Country, 2011 And 2015 (‘000 tonnes capacity)
Financial Results
Table: Financial Results Of Major Petrochemicals Companies, 2010
Global Oil Products Price Outlook
Emerging Asia Petrochemicals Overview
Taiwan Market Overview
Table: Taiwan’s Olefins Facilities
Table: Taiwan’s Polyolefins Facilities
Table: Taiwan’s Aromatics Facilities
Market Structure
Regulatory Structure
Industry Trends And Developments
Business Environment
Asia Petrochemicals Business Environment Ratings
Table: Asia Pacific Petrochemicals Business Environment Ratings
Limits Of Potential Returns
Risks To Realisation Of Returns
Taiwan’s Business Environment Outlook
Table: BMI Business And Operation Risk Ratings
Institutions
Table: BMI Legal Framework Rating
Infrastructure
Table: Labour Force Quality
Table: Asia, Annual FDI Inflows
Table: Trade And Investment Ratings
Operational Risk
Industry Forecast Scenario
Table: Taiwan’s Petrochemicals Sector, 2008-2016 (‘000 tpa, unless otherwise stated)
Macroeconomic Outlook
Table: Taiwan – Economic Activity
Company Profile
Formosa Plastics Group
Table: 2010 Financial Highlights of Formosa Plastics Group (US$’000)
Chinese Petroleum Corporation (CPC)
Taiwan Styrene Monomer Corporation
USI Corporation
BASF Taiwan
Methodology
How We Generate Our Industry Forecasts
Chemicals And Petrochemicals Industry
Cross Checks
Business Environment Ratings
Table: Petrochemicals Business Environment Indicators And Rationale
Weighting
Table: Weighting Of Indicators Skip to top