Sat, Feb 16, 2019 - Page 12 News List

Formosa Plastics’ units see combined rise in revenue

By Ted Chen  /  Staff reporter

Formosa Plastics Group’s (台塑集團) four major units reported that their combined revenue last month inched up 2.6 percent month-on-month to NT$138.12 billion (US$4.48 billion), ending a four-month streak of consecutive contractions on the back of recovering oil prices.

Formosa Plastics Corp (台塑), the flagship unit of the group, saw the strongest growth last month, with revenue rising 7.5 percent monthly and 1.8 percent annually to NT$19.59 billion.

Last month’s gains were driven by a wave of inventory restocking ahead of Lunar New Year holiday, Formosa Plastics chairman Jason Lin (林健男) told a news conference on Wednesday.

“The rebound suggests that customers are merely topping up inventory and are not eyeing growth,” Lin said.

Next month marks the start of the peak season for petrochemical products and by then market conditions would become clearer, Lin said.

Customers are still tentative about committing to orders while oil and other material prices are down, and world economic growth prospects remain depressed, Lin said.

A ban on imports of liquid caustic soda to India that have not met the Bureau of Indian Standards’ requirements has resulted in a flood of shipments to other markets that do not have such requirements, leading to lower prices, he said.

The ban, which was first announced in April last year and has been enforced since October, is expected to be lifted toward the end of next month, while aluminum oxide manufacturers are set to be back at full capacity at about the same time, boosting demand for liquid caustic soda, Lin said.

Other upsides include the removal of about 5.83 million tonnes of production capacity from the market next month as the company’s Asian rivals begin a round of annual maintenance at their facilities, he said.

Another unit, Formosa Chemicals & Fibre Corp (台灣化學纖維), posted the poorest showing last month, reporting revenue of NT$31.7 billion, a 0.4 percent monthly decline.

The company held back some shipments last month due to a slump in prices and is hoping for a rebound next month, Formosa Chemicals vice chairman Hong Fu-yuan (洪福源) said.

Formosa Petrochemical Corp (台塑石化), the group’s oil refinery arm, saw its top line rise 3.5 percent monthly to NT$61.84 billion as oil prices are still lower than they were a year earlier.

Meanwhile, Nan Ya Plastics Corp (南亞塑膠) reported that its revenue rose 0.7 percent monthly to NT$25 billion due to a gloomy outlook for electronic components.

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