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Rivals Formosa Petrochemical, CPC Corp may join hands

13
Dec '11
Formosa Petrochemical Corporation (FPCC) and CPC Corporation, competitors in the Taiwanese domestic market, are likely to join hands to face economic downturn.

In order to enhance the capacity utilization rate of its three olefin plants, it is possible that Formosa Petrochemical may sell its propylene and ethylene to CPC Corporation. Currently, only 86 percent of the plants' capacities are being utilized.

CPC Corp. is facing a gap in the supply-demand of basic petrochemical materials and it relies on import of propylene and ethylene. Procuring the same from FPCC would decrease CPC Corporation's dependence on imports, and it would be able to supply the materials to its downstream petrochemical companies through pipelines.

The cooperation between the two companies would help bring stability to both supply and prices of synthetic fibre materials. This would, in turn, benefit downstream companies like China Petrochemical Development, USI Corp., TSRC and LCY Chemical.

It would also increase efficiency in transportation and reduce cost as CPC Corporation's factory complex is connected with downstream factories through pipelines. So, Formosa Petrochemical would have to ship its propylene and ethylene to CPC Corp., which would then supply the same to downstream units via the pipelines.

Currently, CPC Corporation supplies its propylene and ethylene output to 17 mid- and downstream companies such as TSRC, LCY Chemical, USI and China Petrochemical Development. FPCC's supply is mostly limited to Formosa Plastic Group's own mid- and downstream factories.

Both CPC Corp. and FPCC have been competitors in Taiwanese market for long. However, things took a turn after two former CPC Corporation executives took prominent positions in FPCC's management following a series of fire incidents at Formosa's factories.

Fibre2fashion News Desk - India


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