APIC '07: Petchems to bring profits for Nan Ya

16 May 2007 20:26  [Source: ICIS news]

By Florence Tan

TAIPEI (ICIS news)--Nan Ya Plastics, part of the Formosa Plastics Group, will rely on petrochemicals to roll in profits this year as it brings three projects on stream, a key executive said in an interview on Wednesday.

The company’s operating profit soared 80% in the first quarter from the same period a year ago on high petrochemical margins and it expects to keep the momentum going, executive vice president Wu Chia-Chau said ahead of the Asian Petrochemicals Industry Conference (APIC) which starts on Thursday.

He declined to provide the company’s forecast.

Nan Ya gets 40% of its revenue from petrochemicals and 25% from its electronic materials division, which was not performing well this year, he added.

The company has brought on stream its bisphenol A (BPA) unit and is due to start its new mono-ethylene glycol (MEG) and 1,4-butanediol (BDO) units soon.

Most of the output will be targeted for the China market as over 40% of the world’s polyester capacity was in the country, Wu said.

The company will also provide about 90,000 tonnes/year of MEG to Formosa’s polyester plant in Vietnam, which has a capacity of around 220,000 tonnes/year, he added.

But after these start-ups, the company is less likely to add more large-scale units in Taiwan as it prefers products with smaller capacities and higher margins.

“We don’t have many new projects and our future development won’t be in products with large capacities, Wu said in Mandarin.

Nan Ya will be more likely to expand its BPA capacity rather than MEG, he said, but an exception will be made in China if the Formosa Group builds a cracker in Ningbo.

The company will continue to focus on plasticisers, fibres feedstock MEG and the polyurethane (PU) feedstock chain where it has enjoyed good margins for toluene diisocyanate (TDI), BDO and isononyl alcohol (INA).

It has two projects to produce maleic anhydride (MA) and propylene oxide (PO) on its drawing plan, but these will have to wait for an environment approval from the government on Formosa’s fifth phase of development in Mailiao, Wu said.

The Formosa Group was still in a tussle with the environment ministry on increasing its water allocation at Mailiao and it planned to bring the matter up to the legislative council, he added.

Despite having more cash on hand, Nan Ya may not choose mergers and acquisitions as a way to grow the company.

“It [mergers and acquisitions] is not in our culture,” Wu said, adding the Formosa group will prefer to build its own plants.

By hiring its own employees, it will be easier to pass on the company culture, he added.

By: Florence Tan
+65 6780 4359

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