2023-12-23 21:20:00
Taiwan’s petrochemical industry has been at the bottom since last year. Liu Zhizhong, leader of the International Institute of Obstetrics and Commerce of the Industrial Research Institute, revealed that it is expected that the petrochemical industry’s exports may decline by 20 to 30% this year. To make matters worse, the mainland market, which accounts for 84.4% of Taiwan’s petrochemical product exports, has been even more impacted because the mainland announced that it will suspend ECFA tariff concessions for 12 petrochemical products starting next year. Analysts believe that due to the shrinking demand in the consumer market and the continued expansion of production capacity in mainland China, the petrochemical industry has experienced oversupply and the economy has declined. It is expected that the industry will slowly recover in the second quarter of 2024.
The economic situation report released by the Ministry of Economic Affairs in October showed that the total correlation between the chemical materials industry and the industry was as high as 6.0116, ranking first among all industries. The downturn in the petrochemical industry has gradually affected the terminal labor market. Recently, Nanya, a subsidiary of Formosa Plastics Group, encouraged employees to “retire with preferential treatment.” Although Nanya immediately came forward to clarify, the relevant information has attracted public attention. After all, the petrochemical industry is less likely to hear changes in the labor market than the electronic technology industry. Liu Zhizhong believes that when the economic situation is bad, manufacturers will carry out cost control, and personnel are also a part of the cost.
Luo Kaichen, an industry analyst at the Taiwan Economic Research Institute, analyzed that since 2022, the mainland market demand has been weak, and the overall “price increase and volume shrink”, the petrochemical industry is in recession; this year has not improved, the global economic situation is pessimistic, and the downstream manufacturing industry The economic climate, production and sales are poor, and the mainland’s petrochemical industry continues to ramp up production capacity, resulting in “weak demand and expanding supply.” Product quotations are still weak, so this year’s operating performance is still weak.
Picture/provided by Economic Daily
The production of petrochemical products should basically remain in operation and the production lines should be sustainable.feature. Liu Zhizhong said that the mainland market is shrinking, but production capacity continues to be opened, resulting in more and more products. Recently, mainland manufacturers have “dumped goods” in East Asia, causing East Asian market players, including Taiwanese manufacturers, to complain.
“In the past, the mainland used to import products, but now it exports. This will take some time to digest. It is originally a supply and demand issue.” Industry insiders pointed out that because the mainland has a large production capacity and is doing it under an integrated model. Under supply and demand, the petrochemical industry’s business cycle is very obvious, with a cycle of regarding seven years.
Luo Kaizhen analyzed that mainland China’s petrochemical industry development policy is gradually moving in the direction of complete import substitution, and the import demand for some bulk petrochemical products is bound to decrease year by year. For China’s petrochemical industry, the mainland’s role will gradually shift from the main demand market to production capacity competition. Therefore, bulk petrochemical products will face pressure from production capacity competition in the future, and their profit margins will be pessimistic. However, the impact on high value-added plastic raw material products will be relatively small.
Looking forward to 2024, the petrochemical industry will still face many challenges.Luo Kaizhen pointed out that between the Organization of the Petroleum Exporting Countries (OPEC) andRussiaFactors such as the production reduction policy and geopolitical risks are expected to boost international crude oil prices next year. Therefore, for industry players, raw material cost expenditures are bound to increase. At the same time, players also need to face price competition for petrochemical production capacity, and some petrochemical items with high excess pressure may face greater cost pass-through pressure.
But amid the challenges, there are also positive signs. Luo Kaichen said that the petrochemical industry’s prosperity this year has been relatively low. According to the Taiwan Economic Research Institute’s prosperity survey, most manufacturers remain cautiously optimistic regarding the market demand prospects next year. Export markets such as mainland China, Southeast Asia and India should have the opportunity to recover. Therefore, there should be a chance that petrochemical industry shipments will increase in 2024 compared with this year. Therefore, it is predicted that the petrochemical industry’s prosperity in 2024 should show a rebound trend from the bottom in 2023.
The industry is oversupplied and petrochemical industry exports may decline by 30% throughout the year.
Taiwan’s petrochemical industry has been at the bottom since last year. Liu Zhizhong, leader of the International Institute of Obstetrics and Commerce of the Industrial Research Institute, revealed that it is expected that the petrochemical industry’s exports may decline by 20 to 30% this year. To make matters worse, Taiwan’s…
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