Formosa Plastics Corp (FPC, 台塑) chairman Lee Chih-tsuen (李志村) said yesterday he maintained a conservative outlook on the petrochemical industry in the second half of the year amid global and domestic economic uncertainties.
However, the flagship unit of Formosa Plastics Group (FPG, 台塑集團) will continue its investments in Taiwan, China and Vietnam to develop high value-added products and strengthen the company’s competitiveness, he said.
“The petrochemical industry’s outlook this year allowed for no optimism,” Lee told shareholders at its annual general meeting.
Demand for ethylene for this year is still expected to be larger than supply, as newly added ethylene capacity, which totaled 2.2 million tonnes, may be lower than growing new demand, which amounted to 3.4 million tonnes, Lee said, citing data from Chemical Market Associates Inc (CMAI).
However, the continuing European debt crisis and China’s monetary tightening policy might slow consumption, further dragging down demand for petrochemical products, Lee said.
The economic penalties imposed on Iran by the US and Europe might also raise crude oil prices and pose higher risks of a global economic recession, the other major downside for the petrochemical sector, he added.
Domestically, Lee said political issues have been damaging the nation’s economic competitiveness.
When signing a free-trade agreement, sacrificing certain industries is inevitable, but the government should focus on achieving such goals, Lee said, indicating that the government should accelerate relaxing its ban on imports of US beef containing ractopamine to strengthen Taiwan’s economic integration with other countries.
In addition, Lee said environmental groups’ unreasonable protests dragged down various companies’ investments in Taiwan, showing that the government lacked an industrial strategy.
However, the company will continue its investment project in Mailiao (麥寮), Yunlin County, while proceeding with its international expansion plan, including building petrochemical plants in Ningbo, Zhejiang Province, stainless steel plants in Fujian Province and steel plants in Vietnam.
These projects will be finished or formally start production between next year and 2015, further helping the company raise its competitiveness.
FPC’s shareholders approved a NT$4 cash dividend per share, based on the company’s net profit last year of NT$35.72 billion (US$1.2 billion), or NT$5.84 per share, the company’s financial statistics showed.
The cash dividend was lower than the record-high NT$6.8 cash dividend the company distributed to shareholders last year.
FPC’s shares rose 2.06 percent to close at NT$79.4 yesterday, compared with the TAIEX’s 0.11 percent drop, Taiwan Stock Exchange data showed.