The output value of Taiwan’s petrochemical sector is expected to rise about 7.6 percent in the fourth quarter from a quarter earlier on expectations that stimulus measures by major economies will boost demand, a government report said yesterday.
However. the output value of the sector for all of this year is expected to fall 4.7 percent from last year because of the uncertainty over the global economy this year, the Industry and Technology Intelligence Services (ITIS) report said.
The ITIS, a research institute under the Ministry of Economic Affairs, estimated output of the local petrochemical sector in the fourth quarter at NT$462.2 billion (US$15.83 billion), up from NT$429.5 billion a year earlier.
However, for the year as a whole, the production value of the sector will likely fall to NT$1.83 trillion, from NT$1.92 trillion last year.
The institute’s estimate of higher output in the fourth quarter largely reflected optimism over the stimulus packages put in place recently by major economies, such as China’s move to pump funds into the market, and the US Federal Reserve’s third round of quantitative easing.
A further factor is the stabilizing of international crude oil prices in the fourth quarter, generating higher margins for petrochemical manufacturers and encouraging them to raise shipments, the report said.
CPC Corp, Taiwan’s (CPC, 台灣中油) residue fluidized catalytic cracking plant has started boosting the state-owned oil supplier’s production of propylene, which should also help raise total petrochemical output in the current quarter, the ITIS said.
However, the institute said that the local petrochemical industry felt the pinch from concerns over the eurozone’s debt problems earlier in the year and also faced rising competition from emerging economies that were ramping up production capacity.
As a result, the research institute expects petrochemical output for the whole year to trend lower from a year earlier.
It also cautioned that negative factors are still in place, but are offset for the time being by stimulus measures.
In the third quarter, the output of the petrochemical sector fell 4.1 percent from the second quarter to NT$429.5 billion on limited suspension of production by CPC and the Formosa Plastics Group (FPG, 台塑集團) due to annual maintenance, the ITIS said.
In the July-September period, the output of the petrochemical raw material segment fell 8.6 percent from a quarter earlier to NT$264.6 billion, while the production value of the artificial resin and plastics segment rose 4.5 percent to NT$151.8 billion, the research institute said.
During the same period, output of the artificial rubber segment fell 12.2 percent from the second quarter to NT$13 billion, the ITIS said.