A Democratic Progressive Party (DPP) lawmaker yesterday called for a government probe into Formosa Petrochemical Corp (FPCC, 台塑石化) over suspected output cuts and possible stockpiling of key petrochemical feedstocks amid a plastics shortage in Taiwan.
At a news conference, DPP Legislator Chung Chia-pin (鍾佳濱) said Formosa Plastics Corp’s (FPC, 台塑) polyolefin division reduced supply to downstream clients twice last month and raised prices, citing upstream constraints in ethylene and propylene.
The division notified customers on March 2 that supply would be halved, citing planned production cuts by upstream supplier FPCC, just days after tensions in the Middle East escalated, he said.
Photo: Peter Lo, Taipei Times
Chung questioned the timing of the move, saying such an early and steep reduction could have triggered panic buying and driven up prices.
Another notice on March 10 cut supply further to 25 percent of the already-contracted volumes and raised prices by NT$10.5 per kilogram, with the remaining quota to be released depending on market conditions, he said.
The company was creating artificial shortages to drive up prices, potentially contravening Article 251 of the Criminal Code on hoarding, Chung said, adding that the situation had affected CPC Corp, Taiwan (CPC, 台灣中油), which suspended orders for some solvent chemicals from March 10.
FPCC and FPC rejected the allegations, saying price increases were driven by surging upstream costs amid disruptions in the Middle East.
CPC said its ethylene contract price jumped 46 percent last month from US$792 to US$1,155 per tonne, while its average polyethylene price increase was about NT$6.75 per kilogram (or about US$210 per tonne), adding that it had absorbed part of the cost to ease pressure on domestic users.
The company said it also supplied more polyethylene to domestic customers last month than in previous months and maintained full deliveries despite a roughly 10 percent drop in ethylene output caused by feedstock shortages.
Both companies said they would cooperate with any investigation and denied engaging in hoarding or price manipulation.
Investigation Bureau Deputy Director-General Wu Fu-mei (吳富梅) during a legislative committee session said authorities would look into the matter if production cuts were found to have caused shortages or constituted market manipulation.
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