There is a worrying trend for Taiwanese petrochemicals producers to move investment in basic chemicals to mainland China and South East Asia. Unless Taiwan can diversify and specialise to add value to the olefins production it currently possesses, the industry is likely to fall behind and lose its competitive edge.
The Taiwanese petrochemicals industry's recovery in 2015 began to tail off as the industry was affected by the slowdown in China. In the first 10 months of 2015, the chemicals products index grew 0.4% y-o-y and rubber grew 0.6%, but plastic declined 3.7% with the sector reversing the gains it made in the previous year. The trend reflected a 0.6% decline in manufacturing, caused by falling orders from mainland China as well as the effects of water restrictions for producers in response to the drought situation.
Taiwan's reliance on naphtha streams, derived from refining imported crude, puts it on the back foot when competing with ethane-based production in North America and the Middle East. However, falling naphtha costs have offset the effects of falling export orders and declining competitiveness. The proportion of ethane in the mix could increase with the expansion of LNG terminals, while refinery expansion is unlikely over the foreseeable future. Increased flexibility in feedstock supply could help improve Taiwan's competitiveness in petrochemicals, although there is a question of the amount of investment needed to enable ethane to be used in the mix.
The island's producers will need to improve external competitiveness to boost output. This will depend on securing a reduction in tariffs on petrochemical exports to China to boost their competitive edge in the huge mainland market. The 12th round of talks for a cross-strait trade in goods pact or other trade negotiations were being held in Q415 with the Taiwanese negotiators pressing for tariff reductions on petrochemicals.
Taiwan's crude oil distillation capacity from four refineries was about 1.31mn b/d in 2015. However, the planned closure of the 220,000b/d Kaohsiung refinery by the end of the year will likely bring the country's crude oil distillation capacity to 1.09mn b/d by the 2016.
The closure of 500,000tpa ethylene capacity in 2015 will ensure that Taiwan ends the forecast period with just under 4mntpa of ethylene capacity. This may well lead to Taiwan becoming a net importer of ethylene over the medium term.
Taiwan's score fell 0.3 points between 2015 and 2016 to 69.1 on the back of a deterioration in market risk scores as a result of over-supply on the Asian market amid China's slowdown as well as the country's ageing, naphtha-fed petrochemicals industry which is struggling to compete in a market where prices are falling and costs rising. However, it remains in fifth place in the regional rankings. It is now 3.6 points behind Singapore and 1.1 points ahead of Thailand.
The Taiwan Petrochemicals Report has been researched at source, and features BMI Research's market assessment and independent forecasts for key petrochemicals sub-sectors. The report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing companies by products and services, sales, market share, investments, projects, partners and expansion strategies.
BMI's Taiwan Petrochemicals Report provides industry professionals and strategists, sector analysts, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Taiwanese petrochemicals industry.
- Benchmark BMI's independent petrochemicals industry forecasts to test other views - a key input for successful budgetary and planning in the Taiwanese petrochemicals market.
- Target business opportunities and risks in the Taiwanese petrochemicals sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Taiwan.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis, covering the petrochemicals markets, regulatory changes, major investments, projects and company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the petrochemicals sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:
- Energy: Oil production (‘000 b/d), oil consumption (‘000 b/d), net oil exports (‘000 b/d), gas production (bcm), gas consumption (bcm), net gas exports (bcm), oil refinery capacity (‘000 b/d).
- Petrochemicals: Ethylene capacity (‘000 tpa), ethylene production (‘000 tpa), ethylene consumption (‘000 tpa), polyethylene capacity (‘000 tpa), polypropylene capacity (‘000 tpa), polyvinyl chloride capacity (‘000 tpa), polyolefins consumption (‘000 tpa).
- Oil Products Prices: Price forecasts for all major oil-based products (USD/bbl) at major global energy trading hubs.
- Economic: Nominal GDP (USDbn), real GDP growth (%), GDP per capita (USD), population (mn), unemployment (%), exchange rate (against USD).
BMI’s Petrochemicals Risk Reward Index
BMI’s Risk Reward Indices provide investors (both corporate and financial) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Structure, size and value of the industry sector; overview of the industry landscape and key players; assessment of the business operating environment and the latest regulatory developments.
Industry Trends & Developments
Evaluation of company and sector-wide developments, including key projects (as well as expansion plans), latest company financial details and proposed international ventures.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
Global & Regional Market Overview
Analysis of the key trends driving the global industry, including worldwide output/capacity and demand analysis across ethylene, polyethylene, polyvinyl chloride, polystyrene, polyethylene terephthalate and polypropylene. The regional analysis looks at the implications of local and global trends on specific company activity.
Sub-sectors covered by the Petrochemicals Reports include:
Oil & Gas, Oil Refining, Olefins (ethylene, propylene), Polyolefins (polyethylene, polypropylene), Polyvinyl Chloride, Polystyrene
Please note – not all country Reports cover all sub-sectors – see website for details.
The Petrochemicals Market Reports are based on a network of primary sources, such as multilateral organisations (ACC, APLA, Cefi c, ICCA, ICMA), national chambers of commerce and industry, national statistical offi ces, government ministries and central banks, and multinational companies.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.