In the 1960s and 1970s, as Taiwan government established export processing zones and promoted the Ten Major Construction Projects, Taiwan gradually shifted its economy from household and manual production to light industries such as textiles, plastics, and electronics, and later transitioned to heavy industries like petrochemicals and oil refining. With government’s support, the construction of numerous light oil plants enabled Taiwan to become a "petrochemical kingdom" despite not having its own raw material production. In recent years, Taiwan's industrial focus has shifted toward high-tech industries, and the rise of environmental awareness and ESG (Environmental, Social, Governance) initiatives has moved the petrochemical industry out of the spotlight. However, it remains a significant part of Taiwan's economy. Below we will introduce the supply chain of petrochemical industry.
Petrochemical Industry Chain: Upstream
The upstream sector of the petrochemical industry mainly involves oil refining and related drilling equipment. The industry’s foundation is crude oil, so fluctuations in oil prices and supply stability directly affect the entire petrochemical industry. Saudi Arabia and the United States are two of the primary oil import sources for Taiwan. In the upstream sector, crude oil is processed into naphtha (light oil), which is further treated to produce raw materials such as ethylene, propylene, butadiene, benzene, toluene, and xylene.
Notable companies in this sector include CPC Corporation (1328) and Formosa Petrochemical Corporation (FPCC) (6505). The latter one is Taiwan's only private oil refinery and one of the world’s top ten largest refineries.
Petrochemical Industry Chain: Midstream
The midstream sector of the petrochemical industry processes light oil into intermediate materials like ethylene, propylene, butadiene, benzene, toluene, and xylene. Ethylene, for example, the basic raw material for PVC (polyvinyl chloride), synthetic fibers, and synthetic rubber—all critical indicators of the chemical industry’s health.
Midstream products can be broadly categorized into four types: PTA (purified terephthalic acid) catalysts, surfactants, industrial synthetic resins, and plastic/rubber additives. Below is a table summarizing these products for reference:
| Product | Description |
|---|---|
| PTA Catalysts (Purified Terephthalic Acid) | PTA is a petroleum-derived product, with over 90% used to produce polyester. Common applications include polyester fibers used in clothing, PET bottles, audiovisual materials, and more. Relevant companies include China Petrochemical Development Corporation (CPDC) (1314), Far Eastern New Century (1402), and Formosa Chemicals & Fibre Corporation (FCFC) (1326). |
| Surfactants | Surfactants lower surface tension in liquids and are commonly used in cleaning products and water treatment. They are used in textiles, metals, plastics, and paper industries for applications like emulsification, foaming, permeation, cleaning, and lubrication. Companies include Formosan Union Chemical Corp (FUCC) (1709), Ho Tung Chemical Corp. (1714), Chung WHA Chemical Industrial Works, LTD. (1727) |
| Industrial Synthetic Resins | Industrial synthetic resins, derived from petroleum, are polymers used to produce plastics, including PET bottles, plastic bags, electronic casings, automotive parts, and pipes. These materials are used across agriculture, industry, and national defense. Companies include USI (1304), Asia Polymer (1308), China Petrochemical Development (CPDC) (1314), Eternal Materials (1717), Chung WHA Chemical Industrial Works (1727), Daxin Materials (5234) |
| Plastic and Rubber Additives | Additives are used to enhance product quality, such as UV absorbers for color retention, antistatic agents to prevent dust accumulation, and glass fibers for added strength. Other additives include lubricants and antioxidants. Companies include Everlight Chemical Industrial Corporation (1711), Yuan Jen Enterprises (1725), Sunko Ink (1721) |
Petrochemical Industry Chain: Downstream
The downstream sector involves processing the raw materials into plastic, rubber, synthetic fibers, and other everyday products. These applications are extensive and can be categorized into plastic products, cleaning supplies, dyes/pigments, pesticides, rubber products, synthetic fibers, adhesives, and cosmetics. Below is also a table summarizing these products for reference:
| Product | Description |
|---|---|
| Plastic Products | Common items include plastic sheets, packaging bags, and remote control casings. Plastics are also used in electronics, automotive components, and optics. Companies include Formosa Plastics Group (1301), Grand Pacific Petrochemical Corporation (1312), Far Eastern New Century (1402), Universal Incorporation (1325) |
| Cleaning Supplies and Sanitary Materials | This category includes household cleaners like laundry detergent and glass cleaner, as well as industrial water treatment agents. Sanitary materials like wet wipes, bandage patches, diapers, and sanitary pads are also included. Companies include Farcent Enterprise (1730), Maywufa Company (1731), Mao Bao (1732) |
| Dyes and Pigments | Dyes, often organic, are used in textile dyeing due to their resistance to water and colorfast properties. Increasing demand also comes from optical applications and printed circuit boards (PCBs). Applications extend to inks, toys, furniture, and leather. Companies include Everlight Chemical Industrial Corporation (1711), USI Corporation (6509), Allied Industrial (4702) |
| Pesticides | Pesticides include insecticides, herbicides, and fungicides, used primarily in agriculture. Companies include Sinon Corporation (1712). |
| Rubber Products | Rubber products have broad applications, including tires, waterproof gaskets, gloves, and rubber bands. Companies include Federal Corporation (2102), TSRC Corporation (2103), Cheng Shin Rubber (2105), Kenda Rubber Industrial (2106), Shin Foong Specialty &Applied Material (6582) |
| Synthetic Fibers | Major components like nylon and polyester are used in clothing, synthetic leather, and industrial fabrics. Companies include Formosa Plastics Group (1301), Nan Ya Plastics Corporation (1303), Formosa Chemicals & Fibre Corporation (1326), Shinkong Synthetic Fibers Corporation (1409) |
| Adhesives | Adhesive products include super glue, hot melt adhesives, glue sticks, UV adhesives, and film adhesives. Companies include Everlight Chemical Industrial Corporation (1711), Eternal Materials (1717), Daxin Materials Corp.(5234) |
| Cosmetics | Among the highest-margin and lowest-risk categories, cosmetics are seeing increased interest from biotech and pharmaceutical companies. Potential growth opportunities abound. Companies include Taiyen Biotech (1737), Nan Liu Enterprise (6504), Panion & BF Biotech Inc. (1760) |
After this detailed introduction, we hope you have a clearer understanding of the petrochemical industry’s complexity. With the industry currently experiencing a cyclical downturn, it may present potential investment opportunities for those keeping a close watch!
