Formosa Plastics Group show disappointing 3rd quarter results

The Dow Jones reported that all four units of the Taiwanese conglomerate, Formosa Plastics Group, showed disappointing third quarter results brought about by the shutdown of some of the group’s oil and petrochemical plants after they were hit by a series of fires, and a decline in demand from China because of fiscal tightening by the Chinese government. Seven fires have broken out at the group’s Mailiao oil and petrochemical complex since July 2010. The most recent one occurred last July 30 and forced the company to stop operations at the 540,000 barrel-a-day Mailiao refinery. Because of the July 30 fire, the company had to declare force majeure on its petroleum product exports. Formosa Petrochemical Corp. said that it had suffered its first pretax loss since the fourth quarter of 2008. However, officials said that there could be improvement for this year’s final quarter because of the recent fire at the Royal Dutch Shell PLC’s Singapore refinery, which forced Shell to declare force majeure on the supply of oil products. Operations at Shell’s biggest, 500,000 barrel-a-day refinery were shut down with no clear indications on when operations will resume. Formosa Plastics Corp. President Jason Lin said, “With the resumption of facilities, our sales volume will definitely be higher in the fourth quarter from the third quarter, but we are still conservative about the overall outlook as it’s very difficult to predict product prices due to falling global oil prices.” (October 3, 2011)