TAIWANESE COMPANIES EXPANDING PETROCHEMICAL INVESTMENT

Taiwanese companies are stepping up their spending in petrochemicals. Among recent developments, plans are advancing for perhaps two worldscale naphtha crackers in Taiwan, and startup is expected soon for a major, partly export oriented purified terephthalic acid (PTA) project. Plans also are taking shape for investment by Taiwanese companies in the petrochemical industries of Indonesia, Thailand, and the U.S.

April 13, 1992

4 min read

Taiwanese companies are stepping up their spending in petrochemicals.

Among recent developments, plans are advancing for perhaps two worldscale naphtha crackers in Taiwan, and startup is expected soon for a major, partly export oriented purified terephthalic acid (PTA) project.

Plans also are taking shape for investment by Taiwanese companies in the petrochemical industries of Indonesia, Thailand, and the U.S.

Meanwhile, Formosa Plastics Group (FPG), Taipei, plans to set up a special plastics processing zone in China. The project, located at either Guangdong or Amoy in southern China, apparently has been approved by Taiwan's government. The zone will include intermediate and downstream Petrochemical plants and supply Taiwanese owned plants producing plastics in the region. Minister of Economic Affairs Vincent Siew said FPG's plastics processing zone plan is in line with Taiwan's economic policy toward mainland China for integrating efforts of individual investors into coordinated groups or associations.

In a related development, Taiwan's government plans to set up 10,600 postconsumer plastic bottle collection centers island-wide as part of a program to promote recycling of plastic bottles, especially those made of polystyrene or polyethylene terephthalate. The government will require consumers to pay an 8 cents/bottle deposit.

NAPTHA CRACKERS

Industry officials in Taipei say FPG may borrow as much as $2.5 billion to finance construction of Taiwan's sixth naphtha cracking complex.

Officially, FPG says current plans do not call for bank financing, but sources close to the company say such loans have been under consideration for some time, and FPG is likely to approach banks as soon as it receives formal approval for the project from the Ministry of Economics.

Taiwanese banks are expected to furnish as much as 90% of those loans, with the remainder coming from foreign institutions. The Central Trust of China has hinted it is willing to use part of a $10 billion fund earmarked for loans to Taiwanese industry to provide refinancing of loans for the project.

FPG has taken steps to form a new company to oversee construction and operation of the naphtha cracker. The new company will be capitalized at least $10 billion (Taiwanese), or $400 million (U.S.), with funding coming primarily from existing FPG units Formosa Plastics Corp., Nan Ya Plastics Corp., and Formosa Chemicals & Fibres Corp. (FCFP).

Meanwhile, interest is building for a seventh, larger naphtha cracker in Taiwan.

The Taiwan Petrochemical Industry Association says 18 of its members have expressed interest in forming a group to build a cracker with a production capacity of 900,000 metric tons/year of ethylene.

PTA PLANT

ICI Taiwan Ltd. has scheduled an early June start-up for its 350,000 metric ton/year PTA plant following more than 2 years of construction.

With the new $250 million plant, ICI will become Taiwan's second biggest PTA producer. In addition, ICI Taiwan will become the first Taiwanese company to export PTA in significant volumes.

The country's biggest PTA producer, China American Petrochemical Co., sells almost its entire production of nearly 1 million metric tons/year on the domestic market.

The only other two PTA manufacturers of note, FCFP and Tuntex Group, produce mainly for their own consumption.

FOREIGN INVESTMENT

Taiwan's Chi Mei Industrial Co. Ltd. plans to build a major acrylonitrile butadiene styrene (ABS) plant in Texas. The plant, to go on stream in 1995, will have a capacity of 200,000-250,000 metric tons/year of ABS resin.

Chi Mei plans to sell most of the plant's production in the U.S., Canada, and Mexico, with as much as 20% to be shipped to Central America and South America.

In other foreign investment action, Taiwan's Investment Commission has granted approval for Union Petrochemical Corp. to invest $22.36 million in Indonesia's synthetic rubber processing industry.

UPC did not specify what chemicals the planned Indonesian units will produce. In Taiwan, the company is a major producer of dioctyl phthalate, a plasticizer.

Taiwan's Grand Pacific Petrochemical Corp. plans to spend as much as $6.8 million to build or acquire an ABS plant in Thailand.

A final decision on whether to build a plant or acquire a majority interest in an existing operation has not been made. However, plans call for obtaining facilities with a capacity of 8,000 metric tons/year or more.