Sat, Feb 06, 2016 - Page 13 News List

Formosa Plastics Group’s main units hit by crude oil slump

By Ted Chen  /  Staff reporter

Formosa Plastics Group (FPG, 台塑集團), the nation’s largest industrial conglomerate, yesterday said aggregate sales by its four main units continued to dip last month amid falling international crude oil prices.

In addition, the outlook in the near term remains less promising, as downstream clients have maintained a cautious stance toward their inventory levels, the group said.

Last month, the group’s four major units — Formosa Petrochemical Corp (台塑石化), Formosa Plastics Corp (台灣塑膠), Formosa Chemicals and Fibre Corp (台灣化學纖維) and Nan Ya Plastics Corp (南亞塑膠) — saw their combined sales drop 15.6 percent annually and 9.1 percent monthly to NT$101.99 billion (US$3.04 billion).

Nan Ya Plastics led the decline, announcing that its sales last month slid 2.93 percent monthly and 22.6 percent annually to NT$21.15 billion.

The company attributed the decline to a strategic scaling back of ethylene glycol (EG) production that took place between Dec. 28 last year and Thursday last week, which decreased the company’s sales by NT$1.4 billion.

Meanwhile, the company said it also saw less revenues from plasticizer and bisphenol A (BPA) by NT$370 million in total.

Formosa Petrochemical said its sales last month declined 14.8 percent monthly and 15.1 percent annually to NT$42.06 billion.

The oil refiner said the decline came as global crude oil prices shed US$7.2 per barrel last month compared with the previous month, while its oil refining output last month averaged at about 533,000 barrels per day, about 9,000 barrels lower than December last year.

Volatile oil prices and lower factory utilization rate also caused shipments of Formosa Petrochemical’s olefin products to decrease last month to 640,000 tonnes from 690,000 tonnes in the previous month, the company said.

Formosa Plastics, the group’s flagship company and the nation’s largest producer of polyvinyl chloride (PVC), said sales last month declined 4.7 percent sequentially and 16.6 percent annually to NT$14.16 billion, as its production of ethylene vinyl acetate (EVA) was scaled back for maintenance to coincide with the expected lull in activities for the Lunar New Year holiday.

Formosa Plastics said its EVA shipments decreased by 10,000 tonnes last month from December last year, slashing sales by NT$460 million, while PVC shipments were 11,000 tonnes less than the previous month to affect sales by NT$300 million.

The company said it has cut product prices to reflect falling raw material costs.

Formosa Chemicals and Fibre, which produces aromatics and styrenics, said its consolidated sales fell 5.9 percent sequentially and 8.6 percent annually to NT$24.63 billion last month, due to falling average selling prices and planned production cuts.

The company said a decrease of 15,000 tonnes in shipments of p-xylene (PX) and o-xylene (OX) products last month affected sales by as many as NT$380 million, while a tendency among clients to hold back inventory procurement of phenol, acrylonitrile butadiene styrene (ABS), polystyrene (PS) and polypropylene (PP) products until the end of the Lunar New Year holiday also dampened sales by NT$220 million, the company added.

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