Formosa Petchem's H1 income said to rise on China, ME demand

23 March 2010 05:24  [Source: ICIS news]

SINGAPORE (ICIS news)--Taiwan’s Formosa Petrochemical Corp is expected to post a significant rise in its earnings for the first half of 2010 on increased demand from China and the Middle East, analysts said on Tuesday.

Severe cold weather conditions in China in the past few months had reduced the country’s output, forcing it to import most petrochemical products, said Eli Cheng, a research associate at brokerage house Yuanta Securities in Taiwan.

The continued low output of petrochemical firms had boosted Chinese demand for Formosa’s products, Cheng added.

Earnings from the first half of 2010 would account for around two-thirds of the income that the company was expected to register during the year, said Cheng.

In the first half of 2009, Formosa’s gross income was New Taiwan dollar (NT$) 39bn ($1.23bn), while net income stood at NT$18.2bn, it said in a disclosure to the Taiwan Stock Exchange.

Formosa could also see improved demand for its products from the Middle East where reduced natural gas supply had forced companies to cut petrochemical production, said Danny Ho, petrochemicals analyst with Yuanta Securities.

Looking ahead, Formosa’s earnings in the second half of the year could be affected by a number of annual maintenance shutdowns which could limit its supplies, Ho said.

Newly-added capacities in the Middle East and China which were expected to come on stream in the latter half of 2010 could also reduce Formosa’s earnings, he added.

The gas crunch in the Middle East, however, would limit the negative effects of such new start-ups, Ho said.

Formosa Petrochemicals is part of the Formosa Group, which includes Formosa Chemicals & Fibre Corp, Formosa Plastics Corp and Nan Ya Plastics Corp.

($1 = NT$31.81)

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By: Nurluqman Suratman

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