APIC ’24: China oversupply presents challenges and opportunities for Taiwan – PIAT chair

SEOUL (ICIS)–Oversupply of petrochemicals in China has not dampened the country’s role as a key demand driver, presenting Taiwan with both challenges and opportunities, the chairman of the Petrochemical Industry of Taiwan (PIAT) said on Friday.

“As we all know, many large-scale integrated projects are carried out in various parts of China by these years leading to an oversupply of petrochemicals … [but] China remains the primary driver of demand growth,” Mihn Tsao told delegates at the Asia Petrochemical Industry Conference (APIC) in Seoul, South Korea.

“Taiwan, being an export-oriented economy, cannot ignore China’s vast market,” he added.

Last year proved exceptionally challenging for Taiwan’s petrochemical sector, Tsao said, as global economic growth slowed due to inflation, geopolitical tensions, trade disputes, and climate change concerns, Tsao said.

The termination of tariff preferences for 12 petrochemical products under the Economic Cooperation Framework Agreement (ECFA) with China added further strain, he said.

Weak global demand and inventory pressures resulted in a significant 12.5% year-on-year decline in Taiwan’s overall industrial production index last year, the largest in history, Tsao noted.

Taiwan’s petrochemical firms thus experienced reduced operation rates and lower-than-expected profits last year, he said.

Going forward, Taiwan’s petrochemical industry is actively pursuing sustainable solutions, leveraging artificial intelligence (AI) to enhance production processes and efficiency, while transitioning towards green energy-related products such as ethylene-vinyl acetate copolymer (EVA), epichlorohydrin (ECH), and carbon fiber, Tsao said.

Investments in low-carbon energy transformation, circular economy initiatives, and increased renewable energy adoption are also underway to bolster climate change resilience, Tsao added.

The two-day APIC event ends Friday.