Formosa to continue to expand to improve competitiveness in 2010

Taiwan's sole privately run oil refiner - Formosa Petrochemical Corp., plans to improve company competitiveness in preparedness for the anticipated robust demand for its petrochemical products through the middle of 2010. Even when new capacities of approximately 9 mln tpa of ethylene comes onstream in China and the Middle East, the Taiwanese major expects steady demand for its products. Despite additional capacities, prices are expected to remain largely unaffected, as some old and economically uncompetitive plants could also face shutdowns. After volatility at the beginning of the year, strength has been maintained in price of petrochemical products because of reduced oil supply after the onset of the financial crisis, that reduced the supply of feedstock for petrochemicals. The company expects refining margins to rise in Q1-2010 on account of winter demand, dip in Q2, and again rise from Q3-2010. However, demand has a long way to go until it reaches 2007 levels. Formosa Petrochemical plans to spend NT$26 bln (US$803.5 mln) by the end of 2012 to expand the total capacity of its refinery to 593,000 bpd and add a delayed coker, which will produce coke and gasoil, subject to environmental approval. A larger expansion is on the cards at the integrated Mailiao complex - called the fifth-phase expansion, which will include adding a fourth 180,000 bpd crude distillation unit, a hydrocracker, and a range of downstream petrochemical plants. The Taiwanese major is open to cooperation with the Sinopec Group, after the two sides exchanged visits this year, but Formosa Petrochemical looks forward to majority control in any venture, something the Chinese government likely won't support. Currently, Formosa operates three naphtha crackers with total ethylene capacity of 2.935 mln tpa and three crude distillation units with a capacity of 540,000 bpd.
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