Wed, Jan 18, 2006 - Page 11 News List

Competition could eat into Formosa Plastics Group sales


Formosa Plastics Group (台塑集團), Taiwan's biggest diversified industrial conglomerate, said sales may grow at a slower pace this year because of increasing competition.

Revenues from the parent company, the world's biggest processor of plastics for pipes and imitation leather, may rise 7 percent to NT$1.5 trillion (US$47 billion) this year, Lee Chih-tsuen (李志村), president of Formosa Plastics Corp (台塑), the group's oldest company, said on Monday in Mailiao, Yunlin County. Sales grew about 17 percent last year.

Global production capacity of ethylene, a basic chemical used in most plastics, will probably rise 6 million tonnes this year, outpacing the expected 4 million to 5 million tonnes growth in demand, Lee said.

"Growth momentum is slowing," Wang Yung-tsai (王永在), 84, the group's president, told reporters in Mailiao. "Competition is intense."

Earnings started "worsening" in the third quarter of last year, Wang said after a visit to the Mailiao refinery, which is operated by Formosa Petrochemical Corp (台塑石化).

Refining margin, or the difference between prices of oil products and crude costs, averaged about US$10 a barrel in the fourth quarter of last year, lower than the average price of US$11 in the same period in 2004, said Su Chi-yi (蘇啟邑), executive vice president of Formosa Petrochemical.

The company expects to process between 430,000 and 440,000 barrels of oil a day this year, compared with 435,000 last year, Su said. The refiner has a daily capacity of 480,000 barrels.

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