CPC and Formosa Petrochemical to ally

13-Dec-11

To cope with economic slowdown, Formosa Petrochemical may ally with CPC Taiwan, its chief rival on the domestic market, as per Dow Jones Newswires. Formosa Petrochemical may sell propylene to CPC Taiwan, so as to boost the capacity utilization rate of its three olefin plants, currently at 86%. Lin Chin-chu, deputy chief executive of the petrochemical department of CPC Taiwan noted that it is possible for Formosa Petrochemical to sell its excessive output of propylene, ethylene, and butadiene to CPC Taiwan, since the latter now has to rely on import to fill the gap for the supply of basic petrochemical materials. Cooperation between the two companies can help stabilize supply and prices of plastic and synthetic fiber materials, benefiting downstream firms. Since downstream plants are connected with CPC Taiwan’s factory complex via pipelines, Formosa Petrochemical can ship its propylene to CPC Taiwan, which then supplies the material to downstream factories via the pipelines, greatly enhancing transport efficiency and cutting transport cost. At present, Formosa Petrochemical supplies most of its output of propylene, ethylene, and butadiene to Formosa Plastic Group’s own mid- and downstream factories, while CPC Taiwan supplies its output to 17 mid- and downstream firms, including USI, LCY Chemical, China Petrochemical Development, and TSRC.