Eight local petrochemical companies recently submitted applications to the Ministry of Economic Affairs to invest up to US$7 billion in a joint venture in China after the government this month removed some bans on China-bound investment, Petrochemical Industry Association of Taiwan (石化工業同業公會) chairman Jack Shieh (謝俊雄) said yesterday.
On Oct. 1, the ministry relaxed restrictions on Taiwanese petrochemical firms’ investment in China, but required them to hold at least 50 percent of shares in any Chinese joint venture.
Shieh said the eight companies plan to invest in a joint venture with China-based Sinopec Corp (中石化) in Fujian Province’s Gulei Peninsula, but the ministry’s Investment Commission yesterday said it had not yet received the applications.
The eight firms are Ho Tung Chemical Corp (和桐), Hsin Tay Petroleum Co Ltd (盛台), USI Corp (台聚), Asia Polymer Corp (亞聚), TSRC Corp (台橡), LCY Chemical Corp (榮化), Grand Pacific Petrochemical Corp (國喬) and Lien Hwa Industrial Corp (聯華氣體).
“The plan to build oil refineries and naphtha crackers in Fujian is still a rough draft and has not yet received approval from the government,” Shieh told reporters.
The portion of the shareholding among local firms has not yet been decided, Shieh said.
Formosa Plastics Group (FPG, 台塑集團) is still conducting an analysis on whether to increase petrochemical investment in China, FPG vice chairwoman Susan Wang (王瑞華) reportedly told reporters yesterday at a corporate event, as traditional naphtha crackers face challenges from the emerging shale gas industry.
The Industrial Technology Research Institute (ITRI) said in a report released yesterday that Taiwan’s petrochemical sector would see its output grow by between 3.3 and 3.9 percent this year from last year.
However, local manufacturers’ output for next year will grow by only between 1.5 and 2 percent due to intensifying competition in the global market arising from higher operating costs, the report said, saying that Chinese petrochemical firms will use locally produced raw materials to cut costs, while US firms will rely more on cheaper shale oil and gas to mass-produce ethylene and propylene products.
“The government should assist local petrochemical companies to enhance their competitiveness in the global market by reducing tariffs in the short tern,” ITRI analyst Tseng Fan-ming (曾繁銘) said.
“Taiwanese petrochemical firms also need to explore new markets, preferably Southeast Asian countries, to reduce reliance on China’s market, and produce more high value-added chemical products to increase their competitiveness,” he added.
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