Business Monitor International


Taiwan Petrochemicals Report

Published 17 January 2014

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Taiwan Petrochemicals Report

BMI's latest Taiwan Petrochemicals Report foresees a worrying trend for Taiwanese petrochemicals producers to move investment in basic chemicals to mainland China and South East Asia. 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 domestic petrochemicals market was depressed in 2013 and was set for another year of poor market dynamics, with broader economic trends remaining unsupportive. In the first 11 months of 2013, the chemicals products index grew 2.4% y-o-y, but rubber declined 2.5% and plastic fell 1.1%. The trend reflected the poor state of manufacturing, particularly in motor vehicles and parts (down 3.6%), which represent a significant part of the petrochemicals market.

There was nevertheless some expansion in 2013, with CPC bringing its new 700,000tpa cracker at Linyuan into commercial operation in Q313. The facility replaced the 230,000tpa No.3 cracker and also includes capacities of 430,000tpa propylene, 90,000tpa benzene and 130,000tpa butadiene. However, the closure of 500,000tpa capacity in 2015 will ensure that Taiwan ends the forecast period with just under 4mn tpa of ethylene capacity. This may well lead to Taiwan becoming a net importer of ethylene over the medium term, possibly from mainland-based complexes that Taiwanese petrochemicals producers intend to develop following a relaxation of the rules on investment in the PRC.

BMI notes the following trends going forward:

  • The recovery in Taiwan's construction activity is proceeding more slowly than previously expected, putting downward pressure on construction-related plastics, particularly PVC. We have revised down Taiwan's construction growth forecasts for 2014, with real growth for the sector expected to reach 1.9% (previously 2.9%).

  • The automotive industry - a barometer of engineering polymers and rubber consumption - is experiencing a downturn. Due to our...

Table of Contents

BMI Industry View
7
SWOT
8
Political
9
Economic
10
Business Environment
11
Industry Forecast
12
Table: Taiwan's Petrochemicals Sector, 2010-2017, ('000 tpa, unless otherwise stated)
14
Table: Taiwan's Petrochemicals Sector, 2010-2017, ('000 tpa, unless otherwise stated)
15
Macroeconomic Forecasts
16
Macroeconomic Forecast
16
China's Structural Rebalancing Starting To Hurt Taiwan
17
Political Logjam Will Have Economic Implications
18
Table: Taiwan - Economic Activity
18
Industry Risk Reward Ratings
19
Asia Petrochemicals Risk/Reward Ratings
19
Table: Asia Petrochemicals Risk/Reward Ratings
23
Taiwan Petrochemicals Risk/Reward Ratings
23
Market Overview
25
Table: Taiwan's Olefins Facilities
26
Table: Taiwan's Polyolefins Facilities
27
Table: Taiwan's Aromatics Facilities
28
Industry Trends And Developments
29
Company Profile
31
Formosa Plastics Group
31
Table: FPG financial results (TWDmn)
33
Chinese Petroleum Corporation
34
Regional Overview
37
Asia Overview
37
Short-term outlook
37
Preparing for another capacity surge
39
Rapid growth in Southeast
41
Global Industry Overview
42
A Stable 2013, Leading To Growth In 2014-
42
Table: Top 10 Ethylene Producers, 2013
44
Long-Term Growth
44
Shale: The Future Of Feedstock-
46
Threats To growth
49
Global Oil Product Price Outlook
49
Methodology
49
Crude Price Forecasts
50
Table: BMI's Oil Price Forecasts, Average Price (US$/bbl)
50
Variance Across Product Markets
50
Narrower US Market Crude-Product Spreads
54
Weak Demand Persists
55
Risks To Outlook
56
Table: BMI's Refined Products Forecasts, US$/bbl
56
Supply: Supported By Global Refining Capacity
58
Naphtha: US Gas Hits Demand
61
Gasoline And Gasoil/Diesel: Subsidies & Fuel Efficiency Cap Upward Movement
64
Jet Fuel: Limited Upward Movement
66
Table: Total Air Freight And Passenger Volumes
68
Bunker Fuels: Sulphur Control To Hit Rotterdam Hardest
68
Demographic Forecast
72
Demographic Outlook
72
Table: Taiwan's Population By Age Group, 1990-2020 ('000)
73
Table: Taiwan's Population By Age Group, 1990-2020 (% Of Total)
74
Table: Taiwan's Key Population Ratios, 1990-2020
75
Glossary
76
Table: Glossary Of Petrochemicals Terms
76
Methodology
77
Industry Forecast Methodology
77
Risk/Reward Ratings Methodology
79
Table: Petrochemicals Risk/Reward Rating Indicators
80
Table: Weighting Of Indicators
81

The Taiwan Petrochemicals Report has been researched at source, and features Business Monitor International (BMI)'s market assessment and independent forecasts for key petrochemicals sub-sectors. The report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing companies by products and services, sales, market share, investments, projects, partners and expansion strategies.

BMI's Taiwan Petrochemicals Report provides industry professionals and strategists, sector analysts, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Taiwanese petrochemicals industry.

Key Benefits

  • Benchmark BMI's independent petrochemicals industry forecasts to test other views - a key input for successful budgetary and planning in the Taiwanese petrochemicals market.
  • Target business opportunities and risks in the Taiwanese petrochemicals sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Taiwan.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).

Coverage

BMI Industry View

Summary of BMI's key industry forecasts, views and trend analysis, covering petrochemicals markets, regulatory changes, major investments, projects and company developments.

Market Overview

Structure, size and value of the industry sector; overview of the industry landscape and key players; assessment of the business operating environment and the latest regulatory developments.

Business Environment Ratings

BMI's Petrochemicals Business Environment Ratings provide a country-comparative Risk-Reward Ratings index aimed at investors (both corporate and financial) in the regional petrochemicals market.

The ratings methodology makes sophisticated use of over 40 industry, economic and demographic data points and is part of BMI's integrated Country Risk-Industry Ratings products.

Industry Trends & Developments

Evaluation of company and sector-wide developments, including key projects (as well as expansion plans), latest company financial details and proposed international ventures.

BMI Industry Forecasts

Historic data series (2009-2012) and forecasts to end-2018 for all key industry and economic indicators supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:

Energy: Oil production (`000 b/d), oil consumption (`000 b/d), net oil exports (`000 b/d), gas production (bcm), gas consumption (bcm), net gas exports (bcm), oil refinery capacity (`000 b/d).

Petrochemicals: Ethylene capacity (`000 tpa), ethylene production (`000 tpa), ethylene consumption (`000 tpa), polyethylene capacity (`000 tpa), polypropylene capacity (`000 tpa), polyvinyl chloride capacity (`000 tpa), polyolefins consumption (`000 tpa).

Oil Products Prices: Price forecasts for all major oil-based products (US$/bbl) at major global energy trading hubs.

Economic: Nominal GDP (US$bn), real GDP growth (%), GDP per capita (US$), population (mn), unemployment (%), exchange rate (against US$).

Company Profiles

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI's industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc