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Research group offers petrochemical sector guidance

The Industrial Economics and Knowledge Research Center (IEK, 工研院) offered guidance for Taiwan's petrochemical industry in 2013 at an industry forum yesterday.

The research organization recommended that Taiwan's petrochemical companies begin transitioning toward areas with higher profit margins, in light of the rise of low-cost contenders in China and the Middle East.

In addition, despite the gradually recovering global economy, over 95 percent of industry experts anticipate that global petrochemical supply will outstrip demand in 2013.

According to the IEK, Taiwan's petrochemical industry will face challenges from the U.S., China and the Middle East. China's petrochemical industry has been rapidly expanding production capacity in the lower tiers of its supply chain, resulting in the emergence of intensified price competition. While petrochemical capacity utilization is on the rise in the Middle East. The IEK also indicated that the rapidly developing shale gas harvesting industry of the U.S. may threaten Taiwan's petrochemical industry.

The IEK said that it has observed an overabundance in the supply of purified terephthalic acid in China, while demand for Acrylonitrile butadiene styrene, Styrene-butadiene, and Caprolactam appear to be waning. However, current supplies are inadequate to satisfy the demands for polyethylene, ethylene glycol and butadiene.

Through the forum, the IEK observed that most petrochemical companies in Taiwan hold a conservative outlook for the global economy this year, attributed particularly to signs of waning demand in China, the European debt crisis, increasing production capacity of international competitors, and the enactment of anti-dumping measures in many markets.

The IEK cautioned against Taiwan's apparent over-reliance on China, and advised companies to seek alternative markets in Southeast Asia.

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