1st Petrochemicals Division

A. History

FCFC’s investments under the No. 6 Cracking Project included plants in Mailiao and Haifeng compounds for the production of aroma and its downstream petrochemical materials. During the plant construction stage, three expansion units were in charge of different projects. That is, the 2nd Chemical Division oversaw the construction of Aroma Plant 1, Aroma Plant 2 and SM Plant in charge by the 1st Petrochemical Section; the 2nd Petrochemical Section, directly under the President’s Office took charge of the construction of DMF, PP and phenol plants; the 3rd Chemical Division was responsible for the construction of PTA plant. The phase 1 of the No. 6 Cracking Project was on schedule and completed by the end of 1998. From January 1, 1999 on, a new Plastics Division was set up to take over the production and sales of ABS and PS from the 2nd Chemical Division, while the 2nd Chemical Division changed name to “Petrochemicals Division” to take charge of the expansion of Aroma Plant 1, Aroma Plant 2 and SM Plant.

As the No. 6 Cracking Project entered a new phase, the original expansion units under the project underwent reorganization after July 1, 1999. The 1st and 2nd Petrochemical Sections were dissolved. Plants under their charge were assigned to the respective business division. As a result, the Petrochemicals Division is assigned to take charge of the production and sales of aroma, SM, phenol and acetone, and hence the operations and management of Aroma Pant 1, Aroma Plant 2, SM Plant and Phenol Plant. Currently the Division has 483 employees, and total investment in the plants was NT$26.6 billion.

The Aroma Plant 1 and SM Plant at Mailiao compound were brought on-stream at the end of 1998 and began to supply petrochemical intermediaries to the affiliated businesses. The SM Plant acquired Lloyds ISO-9002 certification in July 1999 and its second-phase expansion is now completed and in operation; the Aroma Plant 2 and Phenol Plant at Haifeng compound have been in service since July 2000. Presently all products under the Division have received ISO-9002 certification.  

Since our establishment, we have been carrying on rationalization in various key elements of operation with perseverance and pragmatic approach. We also endeavor vigorously in environmental protection, work safety, cost reduction, quality and performance enhancement. We work closely with upstream and downstream operations under the No. 6 Cracking Project and aspire to collaborate with other operators in the industry to create a bright future for our petrochemical markets.

B. Major Businesses

The major businesses of Petrochemicals Division are manufacture and sales of AROMA. Our products mainly supply downstream operations within the Formosa Plastics Group (FPG) so they can be less reliant on imports and have ready access to reasonably priced supply. FPG has a vertically integrated supply and sales system where products are shipped to downstream via our own pipelines, which is safe, cost-effective, and renders our operations more competitive. Currently the majority of operations within the Group have import needs. Thus our short-term strategy is to balance the output and demands of related products by boosting output and reducing costs to help the downstream products become more competitive in the domestic market and grab greater market share.

We anticipate strong demands for our major products in the Asian markets. Situated at the center of Asian markets and in close proximity to Mainland China market where the biggest growth will occur, Taiwan is in a better position than other countries in terms of market control. Thus our mid- and long-term strategy should target the demand growth in Asian markets by undertaking process debottleneck or capacity expansion to become a steady supplier for downstream operators in the region and work with them to make their products more competitive. For major target markets, in particular the Mainland China market, we plan to set up distribution center or seek strategic alliance to gain access to marketing channels and expand our market domain.