Formosa Petrochemical Corp (
Second-quarter net income rose 67 percent from a year earlier to NT$13.5 billion (US$416 million), the slowest pace since the first quarter of last year.
Soaring crude oil prices and strong competition from state-run Chinese Petroleum Corp (
Increasing production in China, which has helped reduce petrochemical prices, also damped the company's profit growth.
"Profit from petrochemicals may fall because of rising capacity in [China]," Nora Chen of Fubon Securities Investment Trust Co (
"Second-quarter profit was relatively weak because of a narrower refining margin," said Chen, who helps manage US$48 million in assets, including Formosa Petrochemical shares.
Formosa Petrochemical's refining margin, the difference between oil-product prices and crude-oil costs, was about US$7 a barrel in the second quarter, according to Taipei-based Capital Securities Corp (
Shares of Formosa Petrochemical rose 1.2 percent to NT$59.2 by the Taiwan Stock Exchange's 1:30pm close. The stock has advanced 9.1 percent this year, compared with a 1.5 percent decline in the benchmark TAIEX index.
Taiwan's average per-barrel cost of importing crude oil soared 34 percent from a year earlier in the first six months, while gasoline prices increased by less than 8 percent, according to the Bureau of Energy's Web site.
Minister of Economic Affairs Ho Mei-yueh (
That comment followed a government report on Aug. 5 showing that consumer prices last month increased 2.4 percent from a year earlier, matching the rise in the previous month.
Chinese Petroleum controls about 70 percent of the nation's gasoline and diesel markets, while Formosa Petrochemical, a unit of Taiwan's biggest diversified industrial company, has 30 percent.
Taiwan's spot ethylene prices fell about 18 percent during the second quarter, according to oil-pricing service Platts.
The nation's production of chemical materials declined 2.2 percent from a year earlier in June because of falling demand for petrochemicals in East Asia and increased competition from China, the Ministry of Economic Affairs said in a statement on July 21.
Formosa Petrochemical's sales climbed 34 percent from a year earlier to NT$103.7 billion in the second quarter, according to the company's monthly reports. Oil products accounted for 68 percent of sales and petrochemicals for 24 percent.
First-half profit increased 81 percent from a year earlier to NT$30.8 billion, a company filing to the stock exchange showed today.
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